Which business structure does not avoid double taxation?

The structure that does not avoid double taxation is the corporation. In a corporation, the business itself is taxed on its profits, and then when dividends are distributed to shareholders, those dividends are taxed again at the individual level. This results in a double taxation scenario, which is a key characteristic of how corporations are structured for tax purposes.

In contrast, other business structures like Limited Liability Companies, Partnerships, and Sole Proprietorships are typically pass-through entities. This means that their profits are not taxed at the business level; instead, the income passes directly to the individual owners, who report it on their personal tax returns. This pass-through taxation leads to only one level of tax being imposed, thus avoiding the double taxation that corporations face. Understanding these distinctions is crucial for anyone involved in real estate or other businesses, as it can significantly impact financial planning and tax strategies.