Which of the following statements regarding partnerships versus S corporations is false?
A. S corporation shareholders are not liable for entity debts, but general partners are liable for partnership debts.
B. Partners are not permitted to be employees of their partnerships, but S corporation shareholders can be employees of their S corporation.
C. Ordinary income allocated from both types of passthrough entities is subject to self-employment tax.
D. Partnerships have more flexibility than S corporations in the manner in which items are allocated to the owners.
Answer: C
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