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Test your recall > ITX - 35B > Flashcards

ITX - 35B Flashcards

1
Q

Entity (Advantage): Dividends and capital gains taxed at low rates to shareholders

A

C Corporation

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2
Q

Entity (Advantage): Income taxed at rates of separate tax entity

A

C Corporation

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3
Q

Entity (Advantage): Exclusion for 70% of dividends received

A

C Corporation

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4
Q

Entity (Advantage): Deductible employee benefits

A

C Corporation

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5
Q

Entity (Advantage): Passive losses are deductible against active income

A

C Corporation

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6
Q

Entity (Advantage): Income-splitting among up to 100 investors

A

S Corporation

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7
Q

Entity (Advantage): Pass-through of income and losses, up to basis

A

S Corporation
LLC
Partnership
Limited Partnership

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8
Q

Entity (Advantage): No self-employment tax on earnings

A

S Corporation

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9
Q

Entity (Advantage): No accumulation earnings tax or reasonable compensation limit

A 
S Corporation
LLC
Partnership
Limited Partnership
Sole Proprietorship
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10
Q

Entity (Advantage): Income-splitting among unlimited investors

A

LLC

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11
Q

Entity (Advantage): Basis is increased for liabilities and nonrecourse debt

A

LLC
Partnership
Limited Partnership

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12
Q

Entity (Advantage): Income-splitting among owners

A

Partnership

Limited Partnership

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13
Q

Entity (Advantage): No income from the distributions of property or in a liquidation

A

Partnership

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14
Q

Entity (Advantage): No self-employment income is received

A

Limited Partnership

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15
Q

Entity (Advantage): All income and losses are reported by the owner

A

Sole Proprietorship

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16
Q

Entity (Advantage): Corporate tax breaks, such as fringe benefits

A

Personal-Service Corporation

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17
Q

Entity (Advantage): No income tax advantages over the C corporation

A

Personal Holding Company

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18
Q

Entity (Disadvantage): Double taxation of earnings and in liquidation

A

C Corporation

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19
Q

Entity (Disadvantage): AMT applies unless it is a small ___

A

C Corporation

corporation

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20
Q

Entity (Disadvantage): Compensation must be reasonable

A

C Corporation

21
Q

Entity (Disadvantage): Accumulated earnings tax applies

A

C Corporation

22
Q

Entity (Disadvantage): Capital gains are taxed as ordinary income to the corporation

A

C Corporation

23
Q

Entity (Disadvantage): Built-in gains tax

A

S Corporation

24
Q

Entity (Disadvantage): LIFO recapture

A

S Corporation

25
Q

Entity (Disadvantage): Excess net passive income tax

A

S Corporation

26
Q

Entity (Disadvantage): Benefits are taxable to employees who are 2% shareholders

A

S Corporation

27
Q

Entity (Disadvantage): Capital gains may result from converting a corporation to an ___

28
Q

Entity (Disadvantage): Income is self-employment income

A

LLC

Partnership

29
Q

Entity (Disadvantage): Benefits are taxable, except health insurance

A

LLC
Partnership
Sole Proprietorship

30
Q

Entity (Disadvantage): Losses are passive, not deductible against active income

A

Limited Partnership

31
Q

Entity (Disadvantage): No income-splitting

A

Sole Proprietorship

32
Q

Entity (Disadvantage): Flat 35% income tax

A

Personal-Service Corporation

33
Q

Entity (Disadvantage): Passive loss limits apply

A

Personal-Service Corporation

34
Q

Entity (Disadvantage): 20% penalty tax on undistributed income

A

Personal Holding Company

35
Q

Entity (Other Considerations): 1244 stock losses are deductible as ordinary losses (max. of $100,000 for joint filers)

A

C Corporation

S Corporation

36
Q

Entity (Other Considerations): Net operating losses can be carried back 2 years and forward 20 years

A

C Corporation

Sole Proprietorship

37
Q

Entity (Other Considerations): ISOs are taxed at the capital gains rate

A

C Corporation

38
Q

Entity (Other Considerations): Basis in the stock is increased for shareholder loans to the corp., but not for increases in corp. liabilities

A

S Corporation

39
Q

Entity (Other Considerations): A family ___ can be used for estate tax advantages

40
Q

Entity (Other Considerations): Different ownership classes and allocations can be created

41
Q

Entity (Other Considerations): Transfer of interests is restricted

42
Q

Entity (Other Considerations): Departing members must be bought out, often on short notice

43
Q

Entity (Other Considerations): Not appropriate if a public offering is planned

44
Q

Entity (Other Considerations): IRS recognizes family members as ___ only if capital is a material income-producing factor or substantial services are performed

A

partners

Partnership

45
Q

Entity (Other Considerations): IRS may reallocate distributed shares if disproportionate to capital contribution or services

A

Partnership

46
Q

Entity (Other Considerations): ___ cannot be involved in management

A

limited partners

Limited Partnership

47
Q

Entity (Other Considerations): Ownership and income tests apply

A

Personal Holding Company

48
Q

Entity (Other Considerations): An S corporation cannot be a ___.

A

PHC

Personal Holding Company

49
Q

Entity (Other Considerations): Estate tax advantages may apply

A

Personal Holding Company

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