Exam 4: Entities Overview

Jorge is a 60 percent owner of JJ LLC (taxed as a partnership). He is a passive investor in JJ (he doesn't perform any work for JJ) and his marginal ordinary tax rate is 37 percent. Which of the following statements is True regarding Jorge's tax treatment of business income allocated to him from JJ?

From a tax perspective, which entity choice is preferred when a liquidating distribution occurs and the entity has assets that have declined in value?

When an employee/shareholder receives a business income allocation from an S corporation, what taxes apply to the business income allocation?

Which of the following statements is True for a C corporation incurring a net operating loss (NOL) for a tax year that begins in 2018?

S corporations have more restrictive ownership requirements than other entities.

Corporations are legally formed by filing articles of organization with the state in which the corporation will be created.

Generally, which of the following flow-through entities can elect to be treated as a C corporation?

Which legal entity is correctly paired with the party that bears the ultimate responsibility for paying the legal entity's liabilities?

Which of the following legal entities file documents with the state to be formally recognized by the state?

S corporation shareholders who work for the S corporation receive compensation in the form of a guaranteed payment.

A single-member LLC is taxed as a partnership.

The C corporation tax rate is significantly lower than the top individual marginal tax rate.

For tax purposes, sole proprietorships pay sole proprietors guaranteed payments as compensation for their services.

On which form is income from a single member LLC with one corporate (C corporation) owner reported?

Which of the following entity characteristics are generally key drivers for small business owners in deciding which entity to choose?

C corporations and S corporations are separate taxpaying entities that pay tax on their own income.

Tax rules require that entities be classified the same way for tax purposes as they are classified for legal purposes.

General partnerships are legally formed by filing a partnership agreement with the state in which the partnership will be formed.

In its first year of existence, BYC Corporation (a C corporation) reported a loss for tax purposes of ($40,000). How much tax will BYC pay in year 2 if it reports taxable income from operations of $35,000 in year 2 before any loss carryovers?

An unincorporated entity with more than one owner is, by default, taxed as a partnership.