Income Tax Fundamentals 2020
38th Edition
ISBN: 9780357391129
Author: WHITTENBURG
Publisher: Cengage
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Question
Chapter 11, Problem 14MCQ
To determine
Introduction: To operate a business, a taxpayer generally chooses between individual trading,
To choose: The correct statement regarding the election of S corporation.
Expert Solution & Answer
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Students have asked these similar questions
Which of the following is true of a "Subchapter S Corporation"?
The corporation is subject to double taxation.
O The company is not really a corporation so it is not a separate entity from the stockholders and does not file a
tax return.
The owners' personal assets are protected from customers and creditors.
O Tax on the business income of the company is paid only by the business.
O Owners of the equity of this business are called "debtors".
The accumulated earnings tax, which is imposed on corporations for the accumulation of earnings in excess of reasonable business needs, does not apply to:
a. Closely-held corporations.
b. Widely-held corporations.
c. Corporations subject to the personal holding company tax.
d. Both "Widely-held corporations" and "Corporations subject to the personal holding company tax".
e. All of these choices are correct.
Hana has prepared the following list of statements about corporations.
Identify each statement as true or false.
1.
A corporation is an entity separate and distinct from its owners.
2.
As a legal entity, a corporation may buy, own, and sell property: borrow money; and enter into legally
binding contracts.
3.
Shareholders have the right to vote, and to receive dividends on an annual basis.
4.
The profit of a corporation is not taxed as a separate entity.
5.
Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does
not pay its debts.
6.
Ina public company, the transfer of shares from one owner to another requires the approval of either the
corporation or other shareholders.
The board of directors of a corporation is elected by the shareholders.
7.
8.
Corporations are subject to fewer provincial and federal regulations than partnerships or proprietorships.
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Chapter 11 Solutions
Income Tax Fundamentals 2020
Ch. 11 - Ironwood Corporation has ordinary taxable income...Ch. 11 - Tayla Corporation generated $400,000 of taxable...Ch. 11 - Prob. 3MCQCh. 11 - Harrison Corporation generates capital...Ch. 11 - Prob. 5MCQCh. 11 - Prob. 6MCQCh. 11 - Prob. 7MCQCh. 11 - The purpose of Schedule M-1 on the corporate tax...Ch. 11 - Prob. 9MCQCh. 11 - Prob. 10MCQ
Ch. 11 - Prob. 11MCQCh. 11 - Prob. 12MCQCh. 11 - Prob. 13MCQCh. 11 - Prob. 14MCQCh. 11 - Prob. 15MCQCh. 11 - Prob. 16MCQCh. 11 - Prob. 17MCQCh. 11 - Prob. 18MCQCh. 11 - Prob. 19MCQCh. 11 - Prob. 20MCQCh. 11 - Prob. 21MCQCh. 11 - Quince Corporation has taxable income of $485,000...Ch. 11 - Prob. 2PCh. 11 - For its current tax year, Ilex Corporation has...Ch. 11 - DeMaria Corporation, a calendar year corporation,...Ch. 11 - Fisafolia Corporation has gross income from...Ch. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - The Loquat Corporation has book net income of...Ch. 11 - Caloundra Corporation has book income of $ 40,000....Ch. 11 - Prob. 10PCh. 11 - Prob. 11PCh. 11 - Prob. 12PCh. 11 - Prob. 13PCh. 11 - Grevilla Corporation is a manufacturing company....Ch. 11 - Prob. 15P
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- Select the best term for each definition below. Definitions Terms a. Shareholders can lose no more than the amount they invest in the company. b. Corporate earnings are taxed twice—at the corporate level and individual shareholder level. c. Like an S corporation, but there are no limitations on the number of owners as in an S corporation. d. Traces the line of authority within the corporation. e. Allows for legal treatment as a corporation, but tax treatment as a partnership. f. Has stock traded on a stock exchange such as the New York Stock Exchange (NYSE). g. The first time a corporation issues stock to the public. h. Describes (a) the nature of the firm’s business activities, (b) the shares to be issued, and (c) the composition of the initial board of directors.arrow_forwardWhich of the following is wrong? Exempt corporations are subject to income tax on their income from unrelated activities. Government-Owned and Controlled Corporations are subject to regular corporate income tax. Exempt corporations who filed late are not subject to penalties because they have no tax due. None of the above.arrow_forwardWhich of the following is true? Non-profit corporations are exempt from corporate income tax. Domestic corporations shall choose ether MCIT or RCIT. Whenever MCIT is payable, there is a Net Operating Loss Carry-Over. MCIT does not apply to foreign corporations.arrow_forward
- Which of the following characteristics best describes a corporation? business with a single owner Is not taxed Stockholders not personally liable for entity’s debts Not a separate taxable entityarrow_forwardA C corporation can be described as: (a) A business that is separate and distinct from its owners, allowing the owners to conduct business while limiting their personal liability. (b) A business association defined by federal statute. (c) A legal entity that has more than one shareholder. (d) A type of corporation where owners have limited liability, and income, expenses, and deductions flow through to the shareholders and are taxed only at the shareholder level.arrow_forwardAn S corporation is subject to the following tax(es). a.Corporate income tax. b.Built-in gains tax. c.Alternative minimum tax. d.None of these choices are correct.arrow_forward
- An S corporation avoids taxes at a. none of the choices. b. the corporate level. c. the market level. d. the shareholder levelarrow_forwardCorporations are not without certain disadvantages. Most corporations are taxable entities, and their income is subject to taxation. This "income tax" is problematic as it oftentimes produces double taxation. This effect occurs when shareholders receive cash dividends that they must include in their own calculation of taxable income. O True Falsearrow_forward4) Identify which of the following statements is true. A) The S corporation rules were enacted to allow small corporations to enjoy the nontax advantages of the corporate form of business without being subject to the tax disadvantage of double taxation. B) A partnership can elect to be taxed as a corporation under the check-the-box regulations. As a corporation, an S election can be made. C) For C corporations that desire to be taxed like a partnership, the S corporation rules provide a practical alternative for an existing C corporation to obtain many of the tax benefits of being taxed as a partnership. D) All of the above are true. 5) Identify which of the following statements is true. A) A partnership can be an S corporation shareholder. B) A nonresident alien can be an S corporation shareholder. C) An S corporation can have more than 100 individual shareholders, since families are treated as a single shareholder. D) All of the above are false. 8) Identify which of the following…arrow_forward
- Which of the following is an advantage of a corporation? ANSWER O O O O The earnings of a corporation are not taxed. Transfer of corporation ownership is easy. Startup costs for a corporation are less expenses than other business forms. Stockholders have unlimited liability. I DON'T KNOW YETarrow_forwardWhich of the following is true? Exempt corporations can claim the corporate OSD against gross income. The MCIT applies to domestic and resident corporations. Marketing expenses is a direct cost of service of a corporate car-parking operator. Dealers of securities are exempt from improperly accumulated earnings tax.arrow_forwardCorporations are subject to specific corporate tax rates different from those for individuals. True or false ?arrow_forward
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