Pass through taxation,

Definition of Pass through taxation:

1. Method in which a firms owners pay income tax on the firms income and not the firm. Sole proprietorships, S corporations, and partnerships pay tax through this method.

How to use Pass through taxation in a sentence?

1. The pass through taxation was advantageous to the newly incorporated firm as they ended up paying less taxes than the alternative option.
2. Although S corporations are not usually required to pay federal income taxes, instead using the method of pass through taxation , it should be noted that their shareholders, by bearing the brunt of the companies losses and accruals, a net gain or loss that they must in turn report to the Internal Revenue Service, it can be said that Uncle Sam, still gets his.
3. I was explained how pass through taxation worked and how they got taxed on their income, rather than the firms, which was pretty interesting.