R1:M5 - Items from Other Entities

Question 1

What is a Separate Taxpaying Entity?

Answer 1

A business entity that pays tax on income earned by the business

Question 2

What is a Flow-Through Entity?

Answer 2

An business entity that reports income on a tax return filed for INFORMATIONAL purposes only.

The income flows through to the owners (or shareholders) of the entity’s personal tax return.

Therefore the tax is paid at the owner or shareholder level ONLY.