Federal Taxation of Entities - Entities - Easy Quiz

In which entity does the owner have limited liability for the acts of the company? A.) C Corporation B.) Partnership C.) Sole Proprietorship

A.) C Corporation

Caution! This question may have multiple correct answers. Which of the following attributes does a regular corporation have? (Check ALL that apply.) A.) Limited liability of owners B.) Owners pay tax on their share of corporate net income C.) Requires registration with the state of incorporation D.) Distributions to owners flow through tax-free

A.) Limited liability of owners; C.) Requires registration with the state of incorporation

Caution! There may be more than one correct answer. Which of the following are characteristics of an "S" corporation? (Check ALL that apply.) A.) Must register incorporation papers with the state B.) Makes guaranteed payments to owner/employees C.) Limited liability of shareholders D.) Distributions flow through to owners tax free

A.) Must register incorporation papers with the state; C.) Limited liability of shareholders; D.) Distributions flow through to owners tax free

Which of these could normally form a Personal Service Corporation? A.) Construction companies B.) Certified Public Accountants C.) A wholesale lumber yard D.) Retail clothing outlets

B.) Certified Public Accountants

Which type of business entity does NOT need to be authorized by the state? A.) Partnerships B.) Sole Proprietorships C.) S Corporations D.) C Corporations

B.) Sole Proprietorships

How are the dividends to owners of a C Corporation taxed? A.) Once when distributed at the owner level B.) Twice; at the corporate level and at the owner level C.) Once at the corporate level D.) They're not; corporate dividends are distributions and only earnings are taxed

B.) Twice; at the corporate level and at the owner level

Caution! This question may have more than one correct answer. Which of the following are partnership attributes? (Check ALL that apply.) A.) Limited liability of owners B.) Articles of partnership must be filed with the state C.) Guaranteed payments may be made to owner/employees D.) Distributions flow through to owners tax-free

C.) Guaranteed payments may be made to owner/employees; D.) Distributions flow through to owners tax-free

Caution! This question may have multiple answers. Which of the following entities may have a salary to its owner(s) and receive a tax deduction? (Check ALL that are correct.) A.) Sole Proprietorship B.) Partnership C.) Regular Corporation D.) S Corporation

C.) Regular Corporation; D.) S Corporation

Which of these Entities is NOT taxed as a flow-through entity? A.) Limited Liability Companies B.) Partnerships C.) Regular Corporations D.) S Corporations

C.) Regular Corporations

A Limited Liability Corporation "Checks-the-box." For tax purposes what did they just do? A.) They use the box to elect "S" corporation status B.) They choose whether to be taxed as a domestic or foreign entity C.) They choose whether to be taxed as a corporation or partnership (or sole proprietorship) in their first year of operation D.) They choose whether to adopt the cash or accrual method of accounting

C.) They choose whether to be taxed as a corporation or partnership (or sole proprietorship) in their first year of operation

A sole proprietor has $137,000 in Schedule C income and takes $43,000 in distributions. How much does the sole proprietor include in income in the current year? A.) $43,000 B.) $180,000 C.) $94,000 D.) $137,000

D.) $137,000

What is the general default taxable entity for companies with more than 1 shareholder? A.) C Corporation B.) S Corporation C.) Sole Proprietorship D.) Partnership

D.) Partnership