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Pass-through tax treatment means that the taxes of a business are “passed through” to the tax return of the individuals owning the business.
Pass-through businesses include:
Two types of businesses are not pass-through businesses: corporations and LLC’s electing to be taxed as corporations. Taxes for corporations aren’t pass through because corporations are separate entities from their owners. Pass-through status also means that these business entities are not subject to double taxation, as are corporations.