Question

1. All of the following are characteristics associated with a sole proprietorship, EXCEPT:

a. income and expense items are reported on Schedule C

b. the owner cannot report passive losses on real estate investments on Schedule D

c.​once calculated, its net income is reported on Form 1040

d.​the owner must pay self-employment taxes to fund both the Social Security and Medicare systems

2.​A sole proprietor is fully liable for the debts and obligations of the business. (True/False).

3.​Each partner in a general partnership is a principal and an agent of the other. (True/False).

4.​Each partner of a general partnership is subject to unlimited personal liability

a. once the partnership agreement has dissolved

b. provided all partners are in agreement that assets of the partnership cannot meet its debts

c. once a member of the partnership cannot survive reasonable compensation requirements

d. unless assets of the partnership are sufficient

5.​Unlike limited partners in a limited partnership, members of an LLC   

a. are not treated similarly for federal tax purposes

b. have many more regulatory requirements

c. may be actively involved in managing the business

d. both a and c

6.​Profits of a corporation are taxed at the corporate level and then at individual level when they are distributed to shareholders. (True/False).

7.​Transferring ownership within a corporation can easily be done by sale, gift, or bequest of stock.   (True/False).

8.​For almost all purposes other than federal income tax, an S Corporation is treated as a “regular’ corporation. (True/False).

9.​To split the money in a retirement account in a divorce, a court order that clearly specifies the amount of the participant’s benefits that the plan administrator must pay to the former spouse or child is called

a. qualified divorce request order

b. qualified domestic relations order

c. qualified joint and survivor annuity

d. qualified pre-retirement survivor annuity

10.​ Which of the following statements concerning head of household status is not correct?

a. filing as head of household rather than single significantly reduces income taxes

b. taxpayer must pay more than half of the cost of keeping up the home

c. taxpayer must have custody of a child for over half of the year

d. may be married if he/she did not live with their spouse during the last 3 months of the year.

Answer 1

You have asked multiple unrelated questions in the same post. I have addressed the first four questions. Please post the balance questions, separately, one by one.

Q - 1

The correct answer is the second option i.e. option b the owner cannot report passive losses on real estate investments on Schedule D

All other statements are correct.

Q - 2 A sole proprietor is fully liable for the debts and obligations of the business. (True/False).

TRUE

Q - 3 Each partner in a general partnership is a principal and an agent of the other. (True/False).

TRUE

Q - 4

The correct answer is the last option i.e. option d. unless assets of the partnership are sufficient