Fred and Barney are entrepreneurs. They want to start a software technology company together and want to form an entity that would: (i) avoid federal income taxation at the entity level and (ii) not expose one to personal liability. Additionally, they want to explore their growth opportunities and would like recommendations on what additional markets to go into and how to go about it.

1. Considering only Fred and Barney's stated objectives of avoiding federal taxation at the entity level and personal liability, which of the following forms of entity would satisfy both objectives? Explain your answer fully, including defining the legal and tax characteristics of each business form and the advantages and disadvantages of each.

a. General Partnership

b. Limited Liability Company

c. Corporation

2. Fred and Barney's software technology provides business solutions through the use of artificial intelligence. What market opportunities would you recommend to Fred and Barney?