After reading this chapter, you should have a good understanding of the following learning objectives: Discuss the legal and nontax characteristics of different types of legal entities, describe the different types of entities for tax purposes, identify fundamental differences in tax characteristics across entity types. | Chapter 15 Entities Overview Learning Objectives Discuss the legal and nontax characteristics of different types of legal entities Describe the different types of entities for tax purposes Identify fundamental differences in tax characteristics across entity types. Entity Legal Classification and Nontax Characteristics Legal Classification Corporation, limited liability company (LLC), general partnership (GP), limited partnership (LP), sole proprietorship Business owners legally form Corporation - file articles of incorporation LLC - file articles of organization GP - written agreement called partnership agreement LP - written agreement and file a certificate of limited partnership Sole proprietors are not required to formally organize their business with the state Entity Legal Classification and Nontax Characteristics Nontax Characteristics Responsibility for Liabilities Corporations and LLCs are solely responsible Partnerships - GPs are ultimately responsible and LPs are not . | Chapter 15 Entities Overview Learning Objectives Discuss the legal and nontax characteristics of different types of legal entities Describe the different types of entities for tax purposes Identify fundamental differences in tax characteristics across entity types. Entity Legal Classification and Nontax Characteristics Legal Classification Corporation, limited liability company (LLC), general partnership (GP), limited partnership (LP), sole proprietorship Business owners legally form Corporation - file articles of incorporation LLC - file articles of organization GP - written agreement called partnership agreement LP - written agreement and file a certificate of limited partnership Sole proprietors are not required to formally organize their business with the state Entity Legal Classification and Nontax Characteristics Nontax Characteristics Responsibility for Liabilities Corporations and LLCs are solely responsible Partnerships - GPs are ultimately responsible and LPs are not responsible Sole proprietorships - Individual owners are responsible (unless single member LLC) Rights, Responsibilities, and Legal Arrangement among Owners Entity Legal Classification and Nontax Characteristics Business entities classification for tax purposes Check the box regulations Taxpaying entities Flow-through entities Corporations are C corporations unless they make a valid S election Unincorporated entities taxed as partnerships if they have more than one owner taxed as sole proprietorships if owned by an individual or as disregarded entities if held by some other entity may elect to be taxed as C corporations Entity Tax Classification Check the box regulations summary Entity Tax Classification Double Taxation Income generated by flow-through entities is taxed only once while income of C corporations is taxed twice Flow-through entity owners pay tax on their share of income as if they had earned it themselves Corporations pay first level of tax on their taxable .