What defines a corporation?

A corporation is defined as a legal entity created under state law, which is the reason this choice is the correct answer. Corporations are distinct from other business forms because they are recognized by the state as separate legal entities from their owners. This legal status allows corporations to enter into contracts, sue or be sued, and own property in their own name.

Additionally, this structure provides limited liability protection to the shareholders, meaning they are typically not personally responsible for the debts and liabilities of the corporation beyond their investment in shares. This protection is a key characteristic that makes corporations appealing for many business owners.

The other options lack the defining characteristics of a corporation. For example, a group of individuals sharing profits refers more to partnerships or informal business arrangements rather than the legal structure of a corporation. The notion of a partnership with limited liability may refer to limited partnerships or limited liability companies (LLCs), which differ from corporations in terms of liability and management structures. Finally, a trust managed by a third party concerns estate management rather than the business operations and legal status associated with a corporation. Understanding these distinctions is essential for grasping the concept of different business structures in real estate and beyond.