FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 11: Entities Overview

Show Answer

Share

---

All types

Filters

Study FlashcardsPractice ExamLearn

Question 41

Multiple Choice

Review LaterAdd Note

Review Later

On which tax form do LLCs with more than one owner generally report their income and losses?

A) Form 1120.
B) Form 1120S.
C) Form 1065.
D) Form 1040,Schedule C.

Correct Answer

verified

Show Answer

Question 42

Multiple Choice

Review LaterAdd Note

Review Later

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?

A) It may carry the NOL back two years and forward 20 years.
B) It may not carry the NOL back to prior years but it may carry it forward 20 years.
C) It may not carry the NOL back to prior years but it can carry the loss forward indefinitely.
D) It may carry the loss back two years and carry the loss forward indefinitely.
E) None of the choices are correct.

Correct Answer

verified

Show Answer

Question 43

Multiple Choice

Review LaterAdd Note

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

Logan,a 50 percent shareholder in Military Gear Inc.(MG) ,is comparing the tax consequences of losses from C corporations with losses from S corporations.Assume MG has a $100,000 tax loss for the year,Logan's tax basis in his MG stock was $150,000 at the beginning of the year,and he received $75,000 ordinary income from other sources during the year.Assuming Logan's marginal tax rate is 24%,how much more tax will Logan pay currently if MG is a C corporation compared to the tax he would pay if it were an S corporation?

Both tax and nontax objectives should be considered when choosing the entity type for a new business.

Owners who work for entities taxed as a partnership receive guaranteed payments as compensation.The guaranteed payments are not self-employment income.

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

The deduction for qualified business income applies to income of all but which of the following tax entity types?

Losses from C corporations are never available to offset a shareholder's personal income.

A single-member LLC is taxed as a partnership.

Corporation A owns 10% of Corporation C.The marginal tax rate on non-dividend income for both A and C is 21%.Corporation C earns a total of $200 million before taxes in the current year,pays corporate tax on this income and distributes the remainder proportionately to its shareholders as a dividend.In addition,Corporation A owns 40% of partnership P that earns $500 million in the current year.Given this fact pattern,answer the following questions: a.How much cash from the Corporation C dividend remains after Corporation A pays the tax on the dividend assuming Corporation A is eligible for the 50 percent dividends received deduction? b.If Partnership P distributes all of its current year earnings in proportion to the partner's ownership percentages,how much cash from Partnership P does Corporation A have after paying taxes on its share of income from the partnership? c.If you were to replace Corporation A with individual A [her marginal tax rate on ordinary income is 37% and on qualified dividends is 23.8 percent (including the net investment income tax)] in the original fact pattern above,how much cash does individual A have from the Corporation C dividend after all taxes assuming the dividends are qualified dividends? Consistent with the original facts,assume that Corporation C distributes all of its after-tax income to its shareholders.

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

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

If an individual forms a sole proprietorship,which nontax factor will be of greatest benefit to the sole proprietor?

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

Unincorporated entities are typically treated as flow-through entities for tax purposes.

Crocker and Company (CC) is a C corporation.For the year,CC reported taxable income of $550,000.At the end of the year,CC distributed all its after-tax earnings to Jimmy,the company's sole shareholder.Jimmy's marginal ordinary tax rate is 37 percent and his marginal tax rate on dividends is 23.8 percent,including the net investment income tax.What is the overall tax rate on Crocker and Company's pre-tax income?

Which tax classifications can potentially apply to LLCs?

The deduction for qualified business income applies to owners of C corporations but not to flow-through entity owners.

Which of the following statements is false for a C corporation that incurred a net operating loss for a tax year ending in 2017?