What is a key feature of a C Corporation?

A key feature of a C Corporation is its ability to offer limited liability protection to its shareholders while also being subject to double taxation. This means that the corporation's profits are taxed at the corporate level, and when those profits are distributed to shareholders in the form of dividends, they are taxed again at the individual level. This structure is characteristic of C Corporations, distinguishing them from other business entities that might not have the same tax implications or liability protections.

In addition to limited liability and the issue of double taxation, C Corporations can raise capital more easily by issuing multiple classes of stock and attracting many investors, which enhances their potential for growth. The ability to have an unlimited number of shareholders does contribute to their attractiveness for large-scale operations, but it is the combination of limited liability and the nature of taxation that fundamentally defines a C Corporation's features.

The option indicating that C Corporations avoid double taxation is incorrect, as this is a hallmark characteristic of C Corporations, making this aspect critical to understanding their structure. Similarly, while a C Corporation can have numerous shareholders, the explanation centers on the unique liability and tax implications making this answer crucial for grasping how C Corporations operate. Contrastingly, claiming that it is simpler to manage than an