Which type of business formed after 1996 is not automatically taxed as a corporation?

Understand the Problem

The question is asking about types of businesses formed after 1996 and which of them do not have to automatically be taxed as a corporation. It provides four options and requires identifying the correct one based on tax classifications.

More Information

Limited Liability Companies (LLCs) formed after 1996 can choose their tax classification, either as a corporation, partnership, or if they are a single-member LLC, as a disregarded entity. By default, they are not automatically taxed as corporations.

Tips

A common mistake is assuming all businesses are automatically taxed as corporations, forgetting the possibility of electing out with forms like the IRS Form 8832.

Sources

• Limitation on limited liability companies (LLCs) - Internal Revenue Service - irs.gov