3 Different forms of businesses have different characteristics. Which of the following characteristics would apply to a partnership? Check all that apply.Legal arrangement between two or more peopleIncome is allocated on a pro rata basisSubject to unlimited personal liabilityTaxed at individual levelChartered by a state and is its own legal entity separate and distinct from its owners and managersCan easily raise large amounts of capitalYou come across different kinds of businesses every day. The following table describes some businesses. Using the description of each business,classify it as a sole proprietorship, a partnership, a corporation, or a limited liability company/limited liability partnership.Business ScenarioType of BusinessAndrew founded and operated a wedding planning agency, which specialized in celebrityweddings. When he died, his business was dissolved because there wasno plan for controlafter his death.Purple Consulting has five consultants in the firm. The company's annual revenue isaround $500,000. Income is distributed among all consultants, and each is personallyliable for claims if the company goes under.DDX Co. is a shipping company. Caesar owned 1,000 shares of DDX stock. He foundbetter opportunities and sold his entire stake in DDX to another investor.Caesar, Rafael, and Jose own an accounting firm in San Francisco. All share in the profitsof the firm proportionately and file taxes at an individual level. According to theiragreement, none of the owners will be held personally liable for the accounting firm'sdebt.

Different forms of businesses have different characteristics. Which of the following characteristics would apply to a partnership? Check all that apply. Legal arrangement between two or more people Income is allocated on a pro rata basis Subject to unlimited personal liability Taxed at individual level Chartered by a state and is its own legal entity separate and distinct from its owners and managers Can easily raise large amounts of capital

Different forms of businesses have different characteristics. Which of the following characteristics would apply to a partnership? Check all that apply. Legal arrangement between two or more people Income is allocated on a pro rata basis Subject to unlimited personal liability Taxed at individual level Chartered by a state and is its own legal entity separate and distinct from its owners and managers Can easily raise large amounts of capital

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 14P

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Similar questions

While sole proprietorships and corporations are the most popular forms of business organization, the limited liability company (LLC) is a close third. Limited liability companies are treated like partnerships in the majority of situations. Why do you think LLCs are gaining in popularity?
Which of the following may not be treated as a partnership for tax purposes? Arnold and Willis operate a restaurant. Thelma and Louise establish an LLP to operate an accounting practice. Lucy and Desi purchase real estate together as a business. Jennifer and Ben form a corporation to purchase and operate a hardware store. All of the above are partnerships.
Businesses can be classified into the following forms: sole proprietorship, partnership, corporation, limited liability company (LLC), and limited liability partnership (LLP). Different forms of businesses have different characteristics. Which of the following characteristics would apply to a limited liability company and a limited liability partnership? Check all that apply. LLPs are not suitable for professional firms such as accounting, law, and architecture Limited financial liability Taxed as a partnership Have corporate ownership structure Owned by single individual Owners have limited liability and right to vote
Everything else equal, including firm size, dollar sales, type of product sold, and so forth, the primary difference between proprietorship and partnership business forms is that _____. A. a partnership has more owners than a proprietorship B. the combined personal liability associated with a partnership is significantly less than the combined personal liability associated with a proprietorship C. a partnership is generally easier to form than a proprietorship D. the annual growth rate of a proprietorship is limited by law, whereas the growth rate of a partnership is always potentially unlimited.
Which of the following statements is always true regarding accounting methods available to a partnership? A) If a partnership has a partner that is a personal service corporation, it cannot use the cash method. B) If a partnership is a tax shelter, it can use the cash method of accounting. C) If a partnership has a partner that is a C corporation, it cannot use the cash method. D) If a nontax-shelter partnership had average annual gross receipts of less than $26,000,000 (2021) for the last three tax years, it can use the cash method.
Sam wants to help his brother, Lou, start a new business. Lou isan auto mechanic but has little business sense, so he needs Sam to help him make business decisions. Should this partnership be arranged as a general partnership or a limited partnership? Why? Should they consider any other form for structuring their business? In your post, only discuss the partnership entity options, do not discuss other business types such as S-corporations.
which of the following is false regarding the partnership form of business? The potential liability of limited partners is limited to the amount they invested in the firm. Partnerships are relatively easy to start Transfer of ownership is easy for the general partners Income of the business is taxed only as the personal income of the partners General partners have unlimited liability for the debts of the firm.
Choose the correct. Which of the following is not a reason for the popularity of partnerships as a legal form for businesses?a. Partnerships may be formed merely by an oral agreement.b. Partnerships can more easily generate significant amounts of capital.c. Partnerships avoid the double taxation of income that is found in corporations.d. In some cases, losses may be used to offset gains for tax purposes.
Which of the following is true? a. Owner in sole proprietorship has less responsibility in running his business compared to partnership b. The liability for sole proprietorship is limited compared to partnership c. The sole proprietorship business has unlimited growth potential compared to partnership d. The owner of sole proprietorship has less available capital compared to partnership
Riki and Sarah, are the owners of Hello Fish Restaurant, a general partnership. What are the chief characteristics, advantages, and disadvantages of this form of business organization? Give an example of how there could be liability for one or both partners based on something that could happen at the restaurant. What organizational structure do you suggest they should form in place of the partnership?
which type of organization should be formed. Rob and Bran want to form a snow removal business. They are deciding between a general partnership and a limited liability company. Bran says it is important that the two have limited liability and do not pay corporate income taxes.
Which of the following is a reason for the popularity of partnerships as a legal form for businesses? Partnerships may be formed merely by an oral agreement. Partnerships can more easily generate significant amounts of capital. Partnerships avoid the double taxation of income that is found in corporations. In some cases, losses may be used to offset gains for tax purposes.