A limited liability company (LLC):

A Must be taxed as a corporation

B Provides liability protection to members and offers flexible tax classification

C Has unlimited personal liability

D Cannot have more than one member

✓ Correct Answer: Option B

LLCs combine liability protection with tax flexibility—can be taxed as sole proprietorship, partnership, S corp, or C corp.

💡 Why is B) the correct answer?

The correct answer to the question "A limited liability company (LLC):" is Option B: Provides liability protection to members and offers flexible tax classification.

The other options — A) Must be taxed as a corporation, C) Has unlimited personal liability, D) Cannot have more than one member — are incorrect for this CPA Exam Prep question. As explained above: LLCs combine liability protection with tax flexibility—can be taxed as sole proprietorship, partnership, S corp, or C corp.

📚 About This CPA Exam Prep Practice Question

This 1-level CPA Exam Prep question from the Regulation (REG) topic is part of BrainForge Quiz's free exam preparation library. Each question includes the correct answer and a detailed explanation to help you understand the underlying concept, not just memorize the answer.

How to use this page: Read the question above, consider all four options (A through D), then check the highlighted correct answer and explanation. For active timed practice, start a free CPA Exam Prep practice test or use flashcards for spaced repetition review.

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A limited liability company (LLC):

✓ Correct Answer: Option B

📚 About This CPA Exam Prep Practice Question

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