Exam 4: Business Entities Overview

Roberto and Reagan are both 25-percent owner/managers for Bright Light Incorporated. Roberto runs the retail store in Sacramento, California, and Reagan runs the retail store in San Francisco, California. Bright Light Incorporated 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 Incorporated is an S corporation, how much income will be allocated to Roberto?

What kind of deduction is the deduction for qualified business income?

A single-member LLC is taxed as a partnership.

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

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

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

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

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

Which of the following statements is true for a C corporation incurring a NOL for a tax year that begins in 2020?

Shareholders of C corporations receiving property distributions must recognize dividend income equal to the fair market value of the distributed property if the distributing corporation has sufficient earnings and profits.

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

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

Corporations are legally better suited for taking a business public compared with LLCs and general partnerships.

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 pretax income?

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

Roberto and Reagan are both 25-percent owner/managers for Bright Light Incorporated. Roberto runs the retail store in Sacramento, California, and Reagan runs the retail store in San Francisco, California. Bright Light Incorporated generated a $129,900 profit companywide made up of a $76,400 profit from the Sacramento store, a ($28,500) loss from the San Francisco store, and a combined $82,000 profit from the remaining stores. If Bright Light Incorporated is an S corporation, how much income will be allocated to Roberto?

What is the maximum number of unrelated shareholders a C corporation can have, the maximum number of unrelated shareholders an S corporation can have, and the maximum number of partners a partnership may have, respectively?

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

What document must an LLC file with the state to organize its business?

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