Solved: 1 A sole proprietorship a Must file a tax return b

1. A sole proprietorship:

(a) Must file a tax return

(b) Requires no formal steps for its creation

(c) Must register with the secretary of state

(d) May sell stock

(e) Provides limited liability to the owner

2. Assuming all other requirements are met, a corporation may elect to be treated as an S
corporation under the Internal Revenue Code if it has:

(a) Both common and preferred stockholders

(b) A partnership as a stockholder

(c) Seventy-five or fewer stockholders

(d) The consent of a majority of the stockholders

3. A limited liability company:

(a) Is regulated by a well-established body of law

(b) Pays taxes on its income

(c) May issue stock options

(d) Must register with state authorities

(e) Protects the owners from personal liability for their own misdeeds

4. A joint venture is a(n):

(a) Association limited to no more than two persons in business for profit

(b) Enterprise of numerous co-owners in a nonprofit undertaking

(c) Corporate enterprise for a single undertaking of limited duration

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 (d) Association of persons engaged as co-owners in a single undertaking for profit

5. A limited liability partnership:

(a) Has ownership interests that cannot be transferred

(b) Protects the partners from liability for the debts of the partnership

(c) Must pay taxes on its income

(d) Requires no formal steps for its creation

(e) Permits a limited number of partners

6. Cobb, Inc., a partner in TLC Partnership, assigns its partnership interest to Bean, who is not
made a partner. After the assignment, Bean asserts the right to (1) participate in the
management of TLC and (2) take Cobb’s share of TLC’s partnership profits. Bean is correct as
to which of these rights?

(a) 1 only

(b) 2 only

(c) 1 and 2

(d) (Neither 1 nor 2)

ANSWER
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