Pass Through Tax Entity
A Sole Proprietorship, Partnership, LLC (that has not made an election on Form 8832 to be taxed as a corporation), or an S-Corporation in which corporate profits pass-through on the form K-1 to the owners on their personal income returns without a separate corporate tax. The entity avoids the double taxation of a C-Corporation in which the entity pays income tax on its profits and the owners also pay taxes on the dividends.