SIE (Securities Industry Essentials) Practice Exam

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Each of the below business enterprises exhibit flow-through of tax and related consequences except:

  1. S corp

  2. Partnership

  3. LLC

  4. C corp

The correct answer is: C corp

The other options - S corp, partnership, and LLC - are all examples of flow-through entities, where the business profits and losses are passed through to the individual owners and they are taxed at the individual income tax level. This means that the business itself does not pay taxes, but the individual owners do. C corp, on the other hand, is a separate entity and is subject to double taxation, meaning the business is taxed at the corporate tax level and then the individual owners are taxed on any dividends or distributions they receive from the business. Therefore, C corp does not exhibit flow-through of tax, making it the correct answer.

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