which type of entities can be partners in a partnership?
The income tax treatment of business earnings depends on what kind of entity the business elects to be for tax purposes. Business entities are generally formed under state law, with the most common forms being corporations, partnerships and limited liability companies. In most cases, businesses can elect to be taxed as either a separate entity (i.e., a C corporation) or on a passthrough basis (e.g., a partnership or an S corporation).