Question

Which of the following legal forms of organization's income is NOT taxed under individual income tax rate?

A)

Partnerships.

B)

Limited partnership.

C)

Corporation.

D)

Sole proprietorships.

Answer 1

Corporations are not taxed under individual income tax rates; instead, they pay corporate income taxes as separate legal entities.

Step-by-step explanation:

The organization's income that is NOT taxed under individual income tax rates is the income of a Corporation. Unlike sole proprietorships, partnerships, and limited partnerships, where the business income is passed through to the individual owners' tax returns, a corporation is taxed as a separate legal entity. Therefore, corporations pay corporate income taxes on their profits, which are taxed at corporate tax rates, rather than individual income tax rates.