Tax Drill - Forms of Business Entities Complete the following sentences regarding the various forms of business entities. Sole proprietorships separate taxable entities. Partnerships subject to the income tax. The tax treatment of limited liability companies usually follows the same tax rules that are applicable to . The C corporation recognized as a separate taxpaying entity. A C corporation may elect to be taxed as . Because they follow the conduit concept as to the treatment of their tax attributes, are often referred to as pass-through entities