F.53 Business succession planning Flashcards
Learners will develop a comprehensive understanding of business succession planning strategies and their implications.
Which of the following is a common objective of business succession planning?
A. Maximizing shareholder returns
B. Achieving tax efficiency
C. Protecting the business against unforeseen circumstances
D. All of the above
D. All of the above
F.53 Business succession planning
Which of the following is an example of a key person in a business?
A. The CEO
B. A part-time employee
C. The company accountant
D. All of the above
A. The CEO
F.53 Business succession planning
Which of the following is an advantage of a buy-sell agreement in business succession planning?
A. It provides a clear plan for how the business will be transferred to new owners
B. It can help reduce estate taxes
C. It can ensure that the business stays in the family
D. All of the above
A. It provides a clear plan for how the business will be transferred to new owners
F.53 Business succession planning
Which of the following is a common triggering event for a buy-sell agreement?
A. The death of an owner
B. The retirement of an owner
C. The divorce of an owner
D. All of the above
D. All of the above
F.53 Business succession planning
Which of the following is an advantage of an installment sale in business succession planning?
A. It can provide a steady stream of income to the seller
B. It can help reduce estate taxes
C. It can ensure that the business stays in the family
D. All of the above
A. It can provide a steady stream of income to the seller
F.53 Business succession planning
Which of the following is a disadvantage of an installment sale in business succession planning?
A. The seller may not receive the full value of the business upfront
B. It can result in a higher tax liability for the seller
C. It can be difficult to find a buyer who is willing to pay over time
D. All of the above
B. It can result in a higher tax liability for the seller
F.53 Business succession planning
Which of the following is an example of a contingency plan in business succession planning?
A. A plan for how the business will be transferred to a family member
B. A plan for how the business will be sold to an outside party
C. A plan for how the business will be managed in the event of the death of a key employee
D. All of the above
C. A plan for how the business will be managed in the event of the death of a key employee
F.53 Business succession planning
Which of the following is an advantage of an employee stock ownership plan (ESOP) in business succession planning?
A. It can provide a tax-efficient way for the owner to sell their shares
B. It can help retain key employees
C. It can provide a way for employees to become owners of the company
D. All of the above
D. All of the above
F.53 Business succession planning
Which of the following is a disadvantage of an ESOP in business succession planning?
A. It can be expensive to set up and maintain
B. It can result in a loss of control for the owner
C. It can be difficult to find a buyer for the shares
D. All of the above
B. It can result in a loss of control for the owner
F.53 Business succession planning
Which of the following is an example of a tax-efficient way to transfer ownership of a business?
A. Gifting shares of the business to family members
B. Selling the business to an outside party
C. Using a grantor-retained annuity trust (GRAT)
D. All of the above
C. Using a grantor-retained annuity trust (GRAT)
F.53 Business succession planning
John and Jane own a business together. What is a common triggering event for a buy-sell agreement?
A. John’s decision to retire
B Jane’s decision to sell her shares
C. John’s death
D. All of the above
D. All of the above
F.53 Business succession planning
Joe owns a business and wants to transfer ownership to his son. Which of the following is an advantage of using an installment sale?
A. Joe can receive the full value of the business up front
B. Joe can avoid paying taxes on the sale
C. Joe can provide a steady stream of income to his son
D. None of the above
C. Joe can provide a steady stream of income to his son
F.53 Business succession planning
Sarah owns a business and is concerned about the impact of her death on the company. What is an example of a contingency plan she could implement?
A. A plan for how the business will be sold to an outside party
B. A plan for how the business will be transferred to her children
C. A plan for how the business will be managed in the event of her death
D. None of the above
C. A plan for how the business will be managed in the event of her death
F.53 Business succession planning
Mike is considering selling his business to his employees through an ESOP. What is an advantage of this approach?
A. It can provide a tax-efficient way for Mike to sell his shares
B. It can help retain key employees
C. It can provide a way for employees to become owners of the company
D. All of the above
D. All of the above
F.53 Business succession planning
Which of the following is an example of a business continuity plan?
A. A plan for how the business will be transferred to a family member in the event of the owner’s death
B. A plan for how the business will be sold to an outside party in the event of the owner’s retirement
C. A plan for how the business will continue operating in the event of a natural disaster
D. All of the above
C. A plan for how the business will continue operating in the event of a natural disaster
F.53 Business succession planning
