Oregon Construction Contractors (CCB) Practice Test

Which type of business is NOT required to file annual income tax returns?

1. C Corporations

2. Sole Proprietorships

3. Partnerships

4. S Corporations

The correct answer is: Partnerships

Partnerships are typically not required to file annual income tax returns in the same way that C Corporations, S Corporations, and Sole Proprietorships are. Instead, partnerships file an information return (Form 1065) with the IRS. This return reports the partnership's income, deductions, gains, and losses, but it does not pay taxes at the partnership level. The income or losses are passed through to the individual partners, who then report their share on their personal tax returns. This "pass-through" taxation allows partners to avoid double taxation, which is often a consideration for C Corporations, where the corporation pays taxes on profits, and shareholders pay taxes again on dividends received. Understanding this distinction is crucial for effectively navigating business taxation in Oregon and beyond.