M5 Items from Other Entities

Question 1

4 Categories of Business Entities

Answer 1

1) Partnership
2) S Corporation
3) Sole Proprietorship
4) C-Corporation

*all passive except for C-Corp

Question 2

Guaranteed payments to partners

Answer 2

• Included as self-employment income to the partner

- Deductible to the partnership in the year the partner reports the income

Question 3

Distributive share of income or loss for a general partnership, net earnings from self-employment include the partner’s ____ share of the income/loss

Answer 3

Distributive

Question 4

In an estate/trust (form 1041), who is responsible for the tax liability on a distribution?

Answer 4

The trust beneficiaries (DNI = Distributable Net Income)