Question 1

For which type of entity is an owner least likely to have an "wherewithal to pay" problem.Explain.Your explanation should briefly describe any wherewithal to pay issue for sole proprietorships, partnerships, S corporations and C corporations.

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Question 2

With respect to special allocations, is the S corporation treated more like a partnership or a C corporation?

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Question 3

Abby is a limited partner in a limited partnership.Her basis in the partnership interest is $80,000, with an at-risk basis of $75,000.Abby's share of the partnership loss for the tax year is $90,000.She reports other income of $275,000 from her job as a controller.How much of the $90,000 can Abby offset against her other income of $275,000? What happens to any balance that cannot be deducted in the current tax year?

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Question 4

From the viewpoint of the entity and the employee recipient, what is the ideal fringe benefit?

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Question 5

In the sale of a partnership, how does the way the sale is structured i.e., sale of the partnership interests versus the sale of the partnership assets) produce different tax consequences for the sellers?

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Question 6

Under what circumstances, if any, do the passive activity loss rules apply to C corporations?

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Question 7

List some techniques for reducing and/or avoiding double taxation by transferring funds to the shareholders that are deductible to the corporation.

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Question 8

To which of the following entities does the AMT apply?
∙ Sole proprietorship.
∙ General partnership.
∙ Limited partnership.
∙ LLC.
∙ S corporation.
∙ C corporation.

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Question 9

Walter wants to sell his wholly-owned C corporation, Cream, Inc.The fair market value of his stock exceeds the corporation's adjusted basis for the assets.Should Walter sell his stock or have Cream sell its assets and make a liquidating distribution to him?

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Question 10

Aubrey has been operating his business as a C corporation for the past 5 years.The corporation pays him a reasonable salary.The profits of the corporation, after paying Federal income tax, are distributed to him each year as a dividend.He is considering electing S status for his corporation in order to avoid double taxation.What factors should he consider assuming after-tax earnings will continue to be distributed to him?

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Question 11

Do the at-risk rules apply to partnerships, LLCs, and S corporations?

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Question 12

When compared to a partnership, what additional requirement applies to keep a contribution of appreciated property to a corporation from causing recognized gain?

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Question 13

Ling owns a sole proprietorship for which the assets have appreciated in value.If Ling is going to sell the business to Abner, should Ling structure the sale as 1) a sale of the individual assets or 2) a sale of the sole proprietorship?

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Question 14

In the purchase of a partnership, how does the way the purchase is structured i.e., purchase of the partnership interests or purchase of the partnership assets) produce different tax consequences for the purchasers?

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Question 15

List some techniques which can be used to avoid and/or reduce double taxation for a C corporation.

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Question 16

How can double taxation be avoided or reduced by owning assets outside a C corporation?

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Question 17

Corey is going to purchase the assets of Kahlyn's sole proprietorship.The assets of Kahlyn's sole proprietorship have appreciated in value.From Corey's perspective, does it matter whether the purchase is structured as 1) the purchase of the individual assets or 2) the purchase of the sole proprietorship?

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Quiz 18: Comparative Forms of Doing Business