What is a pass-through taxation?

Definition pass-through taxation

How do we define: pass-through taxation?

Pass-Through Taxation is the method whereby the income to the entity is not taxed at the entity level, however, the entity does complete a tax return. S corporations and LLCs are both pass-through taxation entities. The income or loss as shown on this return is "passed through" the business entity to the individual shareholders or interest holders and is reported on their individual tax returns.

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Corporate Glossary



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