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Taxation Topic !
Types of Entities
| Question | Answer |
|---|---|
| S corporations have more restrictive ownership requirements than other entities? | True |
| Sole proprietors are subject to self-employment taxes on net income from their sole proprietorship | True |
| Shareholders of C corporations receiving property distributions must recognize dividend income equal to the fair market of the distributed property if the distributing corp has sufficient earnings and profits | True |
| The deduction for qualified business income applies to owners of flow-through entity owners. | True not corps |
| The C corporation tax rate is significantly lower than the top individual marginal tax rate. | true |
| Owners who work for entities taxed as a partnership receive guaranteed payments as compensation. The guaranteed payments are not self-employment income | False they are self-employment income |
| If a C corporation incurs a net operating loss in 2018 it may carry the loss back two years and forward 20 years to offset income in those years. | False that was old tax code pre 2018. New law you cannot cover previous years at all but can carry forward forever |
| The deduction for qualified business income applies to business income to an owner from all but | corporations |
| Can a c corporation who incurs a net operating loss (NOL) for a tax year that begins in 2018 do? | It may not carry the NOL back but can carry forward loss indefinitely |
| What kind of deduction is the deduction for qualified business income? | A from AGI deduction that is not an itemized deduction |
| When an employee/shareholder receives a business income allocation from a S corp what taxes apply to the business income allocation? | regular taxes ( like a dividend shareholder taxed) |
| From a tax perspective, which of the following entity choices would not allow you to offset the entity losses against your income from other sources.? | C Corp |
| A C corp's losses must be used at the entity level. That is | the losses don't flow-through to owners to offset their income from other sources. |
| From a tax perspective, which entity choice is preferred when a liquidating distribution occurs and the entity has appreciated assets | partnership |
| What is the maximum number of unrelated shareholders a C corp, S corp and maximum number of partners a partnership can have | no limit corp, 100 max S and no limit partnership |
| On which tax form do LLC's with more than one owner generally report their income and losses? | 1065 |
| What documents must LLCs file with the state to organize their business. | Articles of organization |
| Which legal entity provides the least flexible legal arrangement for owners? | Corporation |
| Which of the following legal entities file documents with the state to be formally recognized by the state? | LLC |
| What describes the marginal tax rate | The tax rate applied to the next additional increment of a taxpayer's taxable income (or deduction). |
| Corporations with annual average gross receipts exceeding $25 million over the prior three years are required to use the accrual method | True |
| A corporation may not use the cash method of accounting in the second year if it reported more than $25 million in gross receipts in the first year. | true |
| Any Book tax difference that requires an add-back to book income to compute taxable income is an unfavorable book-tax | difference because it requires an adjustment that increases taxable income relative to book income. |
| Income that is included in book income , but excluded from | taxable income results in a favorable, permanent book-tax difference . |
| For a corporation , goodwill created in an asset acquisition generally? | leads to temporary book-tax differences. |
| For tax purposes a corporation may deduct the entire amount of a net capital loss? | In the year incurred. |
Created by:
smcdo11