Which of the following statements is CORRECT?
A) One of the disadvantages of incorporating a business is that the owners then become subject to liabilities in the event the firm goes bankrupt.
B) Sole proprietorships are subject to more regulations than
Corporations.
C) In any type of partnership, every partner has the same rights,
Privileges, and liability exposure as every other partner.
D) Sole proprietorships and partnerships generally have a tax
Advantage over many corporations, especially large ones.
E) Corporations of all types are subject to the corporate income tax.

Question

Quizplus · Accepted Answer

Sole proprietorships and partnerships are taxed as pass-through entities, meaning the profits and losses are reported on the owner's personal tax return and not subject to the corporate income tax. This can result in a tax advantage over corporations, especially large ones. Option A is incorrect as incorporation helps limit personal liability for the owners. Option B is incorrect as corporations are subject to more regulations. Option C is incorrect as partnership agreements can vary, with some partners having different levels of liability and rights. Option E is incorrect as certain types of corporations can be exempt from corporate income tax.

Which of the Following Statements Is CORRECT