A real estate investment company wants to raise capital from multiple investors while avoiding double taxation and providing liability protection. The most common structure is:
- A limited partnership or LLC taxed as a partnership - providing pass-through taxation, limited liability for passive investors, and flexibility in allocating income and losses. (correct answer)
- A C corporation to allow for stock issuance to investors.
- An S corporation to minimize FICA taxes on distributions.
- A real estate investment trust (REIT) for all real estate investments.
Explanation: LPs and LLCs taxed as partnerships are ideal for real estate - pass-through taxation, limited liability, and special allocation flexibility. Answer A is correct.