Which business structure allows for the direct passing of corporate income, deductions, and losses to shareholders?

The Subchapter S Corporation is specifically designed to allow for the direct passing of corporate income, deductions, and losses to shareholders, which is a feature known as "pass-through taxation." This structure permits income to be taxed only at the individual level instead of at both the corporate level and the individual level, avoiding double taxation.

In this setup, shareholders report their share of the corporation's income and losses on their personal tax returns, which can potentially lower their overall tax burden. The S Corporation must meet specific eligibility criteria, such as having a limited number of shareholders and ensuring that all shareholders are individuals or certain types of trusts or estates, to qualify for this treatment.

This is different from other business structures. For instance, a sole proprietorship income is only taxed on the owner's personal tax return, while partnerships also have pass-through taxation but have different considerations regarding partnership agreements and liabilities. Limited Liability Companies (LLCs) can also have pass-through taxation but can be structured in various ways, sometimes involving corporate taxation depending on the number of members and elections made. The specific focus of the question on corporate income and the relevance of S Corporations in offering those precise benefits makes this answer the best fit.