Introduction: To operate a business, a taxpayer generally chooses between individual trading,
To choose: The correct statement regarding the election of S corporation.
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Chapter 11 Solutions
Income Tax Fundamentals 2020
- Which 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 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_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
- 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. > >arrow_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_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_forward
- An S corporation avoids taxes at a. none of the choices. b. the corporate level. c. the market level. d. the shareholder levelarrow_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_forwardWhich 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_forward
- 4) 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_forwardCorporations are subject to specific corporate tax rates different from those for individuals. True or false ?arrow_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_forward