Principles of Taxation

Business

Quiz 10 :

Sole Proprietorships, partnerships, llcs, and S Corporations

Quiz 10 :

Sole Proprietorships, partnerships, llcs, and S Corporations

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All general partners have unlimited personal liability for the debts of the entity.
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True False
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True

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Businesses must withhold payroll taxes from payments made to independent contractors and periodically remit such taxes to the state and federal governments.
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True False
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False

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A partner's distributive share of partnership profits will increase his or her tax basis in the partnership interest.
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True False
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True

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Partners may deduct on their individual income tax returns an amount equal to 100% of self-employment tax paid.
True False
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Businesses are required by law to withhold federal income tax from the compensation paid to their employees.
True False
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Ms.Jack operates a service business as a sole proprietorship.Her taxable income for the current year will be less than $100,000.Ms.Jack is not eligible for the QBI deduction.
True False
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Drake Partnership earned a net profit of $400,000.Four partners share profits and losses equally.No cash was distributed.The partners will report taxable income from the partnership on their personal income tax returns for the year.
True False
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A guaranteed payment may be designed to compensate a partner for personal services rendered to the partnership.
True False
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Haddie's Hats is a regular corporation.The business must file an income tax return each year to report its taxable income or loss and pay any related taxes.
True False
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The FICA taxes authorized by the Federal Insurance Contribution Act is imposed upon all of the employee's wages for the year.
True False
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Partners receiving guaranteed payments are not required to pay self-employment tax on such payments.
True False
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The allocations made to a partner are reported on Schedule K-1 and are referred to as his or her distributive share of partnership items.
True False
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On June 1,Jefferson had a basis in his partnership interest of $75,000.On June 2,he received a cash distribution from the partnership of $28,000.All of the cash distribution is taxable.
True False
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A corporate shareholder usually cannot be held personally liable for the debts arising from the corporate business.
True False
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Mr.Dilly has expenses relating to a qualifying home office of $14,320.The taxable income generated by the business before any deduction of home office expenses was $13,700.His allowable home office deduction is $14,320.
True False
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A partnership is an unincorporated business activity owned by at least two taxpayers.
True False
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Matthew earned $150,000 in wages during 2019.FICA taxes withheld by his employer would have been $11,475.
True False
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Gabriel operates his business as a sole proprietorship.This year the business incurred an operating loss.The loss can be used to offset other business income he earned during the year.
True False
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In contrast to a partnership,every member of an LLC has limited liability for the LLC's debts.
True False
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A partnership deducts guaranteed payments paid to its partners in computing ordinary income,and partners report guaranteed payments received as ordinary income.
True False
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