Which of the following statements is correct regarding the provision for income taxes in the financial statements of a sole proprietorship?

  1. The provision for income taxes should be based on business income using individual tax rates.
  2. The provision for income taxes should be based on business income using corporate tax rates.
  3. The provision for income taxes should be based on the proprietor’s total taxable income, allocated to the proprietorship at the percentage that business income bears to the proprietor’s total income.
  4. No provision for income taxes is required.