Chapter 18 Questions FIN 303

Advantages of the corporate form of business include a. limited liability for stockholders b. avoidance of state taxation c. limited life d. deductibility of dividends

a

Possible advantages of incorporating include 1. permanency 2. ease of transferring ownership 3. avoidance of federal taxes a. 1 and 2 b. 1 and 3 c. 2 and 3 d. 1, 2, and 3

a

Corporate federal income tax rates a. decrease as income increases b. are the same for all level of corporate income c. phase out the benefits of lower tax brackets as corporate income increases d. reach a high of 50 percent for earnings over $18,300,000

c

Owners in which of the following forms of business have unlimited liability? a. LLCs b. corporations c. sole proprietorships d. limited partnerships

c

Corporate losses a. only offset income from prior years b. only offset income earned in subsequent years c. may not be used to offset income from other years d. are carried back and then carried forward

d