Question 1

Which of the following statements is true regarding compensation paid to an owner of an entity taxed as a partnership who works for the entity?

Accepted Answer

A) The compensation is deductible by the entity. 
B) The compensation is self-employment income to the owner-worker. 
C) The entity is not required to withhold FICA tax on the compensation it pays to the owner. 
D) All of these choices are correct. 
A) The compensation is deductible by the entity. 
B) The compensation is self-employment income to the owner-worker. 
C) The entity is not required to withhold FICA tax on the compensation it pays to the owner. 
D) All of these choices are correct.

Question 2

Limited partnerships are legally formed by filing a certificate of limited partnership with the state in which the partnership will be organized.

Accepted Answer

A) True 
 B)False

Question 3

Which of the following legal entities are generally classified as C corporations for tax purposes?

Accepted Answer

A) Limited liability companies. 
B) S corporations. 
C) Limited partnerships. 
D) Sole proprietorships. 
E) None of the choices are correct. 
A) Limited liability companies. 
B) S corporations. 
C) Limited partnerships. 
D) Sole proprietorships. 
E) None of the choices are correct.

Question 4

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

Accepted Answer

A) Limited liability company. 
B) General partnership. 
C) Sole proprietorship (non LL
C) . 
D) None of the choices are correct. 
A) Limited liability company. 
B) General partnership. 
C) Sole proprietorship (non LL
C) . 
D) None of the choices are correct.

Question 5

What tax year-end must an unincorporated entity with only one owner adopt?

Accepted Answer

A) The entity is free to adopt any tax year-end. 
B) The entity must adopt the same year-end as its owner. 
C) The entity must adopt a calendar year-end. 
D) The entity may adopt any year-end except for a calendar year-end. 
A) The entity is free to adopt any tax year-end. 
B) The entity must adopt the same year-end as its owner. 
C) The entity must adopt a calendar year-end. 
D) The entity may adopt any year-end except for a calendar year-end.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

Owners of which of the following entity types receive deductible compensation from the entity for working for the entity?

Accepted Answer

A) Sole proprietorship 
B) Entity taxed as a partnership 
C) S corporation 
D) Two of the above 
A) Sole proprietorship 
B) Entity taxed as a partnership 
C) S corporation 
D) Two of the above

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

In 2019, BYC Corporation (a C corporation)had an NOL carryover from 2017 in the amount of $40,000.How much tax will BYC pay in 2019 if it reports taxable income from operations of $35,000 in 2019 before the NOL deduction?

Accepted Answer

None.BYC's NOL of ($40,000)is available

Question 10

Which legal entity is generally best suited for going public?

Accepted Answer

A) Corporation. 
B) LLC. 
C) Limited liability partnership. 
D) General partnership. 
E) All of these entities are equally suited for going public. 
A) Corporation. 
B) LLC. 
C) Limited liability partnership. 
D) General partnership. 
E) All of these entities are equally suited for going public.

Question 11

The excess loss limitations apply to owners of all of the following entities except which of the following?

Accepted Answer

A) C corporations 
B) S corporations 
C) Entities taxed as partnerships 
D) Single-member LLCs (owned by an individual taxpayer) 
A) C corporations 
B) S corporations 
C) Entities taxed as partnerships 
D) Single-member LLCs (owned by an individual taxpayer)

Question 12

For which type of entity does the entity not pay compensation to an owner who is working for the entity?

Accepted Answer

A) S corporation. 
B) C corporation. 
C) Entity taxed as a partnership. 
D) None of the choices are correct. 
A) S corporation. 
B) C corporation. 
C) Entity taxed as a partnership. 
D) None of the choices are correct.

Question 13

On which tax form does a single-member LLC with one individual owner report its income and losses?

Accepted Answer

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

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

For tax purposes, only unincorporated entities can be considered to be disregarded entities.

Accepted Answer

A) True 
 B)False

Question 16

A single-member LLC is taxed as a partnership.

Accepted Answer

A) True 
 B)False

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

If individual taxpayers are the shareholders of PST Corporation and PST Corporation is a shareholder of MNO Corporation, how many levels of tax is MNO's pretax income potentially exposed to?

Accepted Answer

A) No taxation. 
B) Single taxation. 
C) Double taxation. 
D) Triple taxation. 
A) No taxation. 
B) Single taxation. 
C) Double taxation. 
D) Triple taxation.

Question 19

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

Accepted Answer

A) Sole proprietorship. 
B) Entity taxed as a partnership. 
C) S corporation. 
D) C corporation. 
A) Sole proprietorship. 
B) Entity taxed as a partnership. 
C) S corporation. 
D) C corporation.

Question 20

Roberto and Reagan are both 25-percent owner/managers for Bright Light Inc.Roberto runs the retail store in Sacramento, CA, and Reagan runs the retail store in San Francisco, CA.Bright Light generated a $125,000 profit companywide made up of a $75,000 profit from the Sacramento store, a ($25,000)loss from the San Francisco store, and a combined $75,000 profit from the remaining stores.If Bright Light is taxed as a partnership and it is decided that both Roberto and Reagan will be allocated 70 percent of his own store's profit, with the remaining profits allocated pro rata among all the owners, how much income will be allocated to Reagan?

Accepted Answer

A) ($25,000) 
B) ($17,500) 
C) $5,000 
D) $20,000 
A) ($25,000) 
B) ($17,500) 
C) $5,000 
D) $20,000

Which of the following statements is true regarding compensation paid to an owner of an entity taxed as a partnership who works for the entity?

Limited partnerships are legally formed by filing a certificate of limited partnership with the state in which the partnership will be organized.

Which of the following legal entities are generally classified as C corporations for tax purposes?

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

What tax year-end must an unincorporated entity with only one owner adopt?

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

Owners of which of the following entity types receive deductible compensation from the entity for working for the entity?

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

In 2019, BYC Corporation (a C corporation)had an NOL carryover from 2017 in the amount of $40,000.How much tax will BYC pay in 2019 if it reports taxable income from operations of $35,000 in 2019 before the NOL deduction?

Which legal entity is generally best suited for going public?

The excess loss limitations apply to owners of all of the following entities except which of the following?

For which type of entity does the entity not pay compensation to an owner who is working for the entity?

On which tax form does a single-member LLC with one individual owner report its income and losses?

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

For tax purposes, only unincorporated entities can be considered to be disregarded entities.

A single-member LLC is taxed as a partnership.

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

If individual taxpayers are the shareholders of PST Corporation and PST Corporation is a shareholder of MNO Corporation, how many levels of tax is MNO's pretax income potentially exposed to?

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters

Exam 12: Entities Overview

Which of the following statements is true regarding compensation paid to an owner of an entity taxed as a partnership who works for the entity?

Limited partnerships are legally formed by filing a certificate of limited partnership with the state in which the partnership will be organized.

Which of the following legal entities are generally classified as C corporations for tax purposes?

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

What tax year-end must an unincorporated entity with only one owner adopt?

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

Owners of which of the following entity types receive deductible compensation from the entity for working for the entity?

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

In 2019, BYC Corporation (a C corporation)had an NOL carryover from 2017 in the amount of $40,000.How much tax will BYC pay in 2019 if it reports taxable income from operations of $35,000 in 2019 before the NOL deduction?

Which legal entity is generally best suited for going public?

The excess loss limitations apply to owners of all of the following entities except which of the following?

For which type of entity does the entity not pay compensation to an owner who is working for the entity?

On which tax form does a single-member LLC with one individual owner report its income and losses?

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

For tax purposes, only unincorporated entities can be considered to be disregarded entities.

A single-member LLC is taxed as a partnership.

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

If individual taxpayers are the shareholders of PST Corporation and PST Corporation is a shareholder of MNO Corporation, how many levels of tax is MNO's pretax income potentially exposed to?

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

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Dependents, and Filing Status

Gross Income and Exclusions

Individual for Agi Deductions

Individual From Agi Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Corporate Formations and Operations

Corporate Nonliquidating and Liquidating Distributions

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

Filters