Pass-through entities have many features that are used to determine whether or not they would be an appropriate business entity for each potential owner. One potential tax benefit of a pass-through entity is to eliminate the double taxation which can result when the corporation pays corporate level tax on income and the shareholders pay a second tax on the same income when it is distributed as dividends.

However, the process does not work in reverse, allowing the pass-through owner to pay C corporate tax instead of individual tax. An owner of a pass-through pays tax on all the entities' pass-through income at the owners individual rate. The owner's rate may or may not be lower than the corporate rate. Your statement that "This is when a rich person claims to be a business to pay the corporate tax rate instead of his/her correct income tax rate" is incorrect. In addition why the qualifier Rich Person?

Have a nice day