Reference no: EM132553963

Question No. 1
If C corporations retain their after-tax earnings, when will their shareholders who are individuals be taxed on the retained earnings?

Multiple Choice
• Shareholders will be taxed when they sell their shares at a gain.
• Shareholders will be taxed in the year they elect to be taxed on undistributed retained earnings.
• Shareholders will be taxed on undistributed retained earnings in the year the corporation files its tax return.
• None of the choices are correct.

Question No. 2
Which legal entity is correctly paired with the party that bears the ultimate responsibility for paying the legal entity's liabilities?

Multiple Choice
• LLC - LLC members.
• Corporation - Corporation.
• General Partnership - Partnership.
• Limited Partnership - General partner.
• Corporation - Corporation and Limited Partnership - General partner.

Question no. 3
On which tax form does a single member LLC with one individual owner report its income and losses?

Multiple Choice
• Form 1120.
• Form 1120S.
• Form 1065.
• Form 1040, Schedule C.

Question No. 4
Which of the following legal entities file documents with the state to be formally recognized by the state?

Multiple Choice
• Limited Liability Company.
• General Partnership.
• Sole Proprietorship (non LLC).
• None of the choices are correct.

Question No. 5

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

Multiple Choice
• Limited partnership.
• Limited Liability Company.
• General partnership.
• All of the choices are correct.

Question No. 6

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

Multiple Choice
• Rate at which income from entity will be taxed.
• Required accounting period.
• Liability protection.
• Rate at which income from entity will be taxed and required accounting period.
• Rate at which income from entity will be taxed and liability protection.

Question NO. 7

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

Multiple Choice
• The entity is free to adopt any tax year-end.
• The entity must adopt the same year-end as its owner.
• The entity must adopt a calendar year-end.
• The entity may adopt any year-end except for a calendar year-end.

Question No. 8
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 pre-tax income potentially exposed to?

Multiple Choice
• No taxation.
• Single taxation.
• Double taxation.
• Triple taxation.

Question NO. 9

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

Multiple Choice
• If it carries back the NOL and/or carries it forward, it may offset up to 80% of the taxable income (before the NOL deduction) in those years.
• It may carry the NOL forward for up to 20 years and offset up to 100% of the taxable income (before the NOL deduction) in those years.
• It may carry the NOL back two years and offset up to 100% of the taxable income (before the NOL deduction) in those years.
• None of these (selecting this option means you believe all of these responses are true).