Which of the following statements is correct?
A)The sale of an unincorporated sole proprietorship is always treated as the sale of the business assets.
B)The sale of a partnership is treated as the sale of the individual assets only if the sales transaction is structured as the sale of the individual assets.
C)The sale of a corporation is always treated as the sale of the corporate stock.
D)Only a.and b.are correct.
E)a. ,b. ,and c.are correct.

Question

Quizplus · Accepted Answer

A sole proprietorship is not a separate legal entity, so its assets and liabilities are the personal assets and liabilities of the owner. Hence, the sale of a sole proprietorship is always treated as a sale of the business assets.

In the case of a partnership, the treatment of the sale depends on how the transaction is structured. If the partnership agreement allows for the sale of individual assets, then the sale would be treated as the sale of individual assets. However, if the partnership agreement requires the sale of the entire business or if the buyer is acquiring a partnership interest, then the sale would be treated as the sale of the partnership entity.

The sale of a corporation is usually treated as the sale of the corporate stock. In this case, the buyer acquires the ownership of the corporation, including its assets, liabilities, and obligations. However, there are situations where the sale of a corporation may be structured as a sale of the assets, such as when the buyer only wants to acquire certain assets and not assume all of the liabilities of the corporation.

Which of the Following Statements Is Correct