Which of the following is not an effect of incorporation? Corporations receive a favorable tax treatment on corporate earnings. A corporation is a separate legal entity from the shareholders. Has an indefinite life and cannot be terminated. Assets and liabilities acquired or owned belong to the corporation.

Which of the following is not an effect of incorporation? Corporations receive a favorable tax treatment on corporate earnings. A corporation is a separate legal entity from the shareholders. Has an indefinite life and cannot be terminated. Assets and liabilities acquired or owned belong to the corporation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Select the best term for each definition below. Definitions Terms a. Shareholders can lose no more than the amount they invest in the company. b. Corporate earnings are taxed twice—at the corporate level and individual shareholder level. c. Like an S corporation, but there are no limitations on the number of owners as in an S corporation. d. Traces the line of authority within the corporation. e. Allows for legal treatment as a corporation, but tax treatment as a partnership. f. Has stock traded on a stock exchange such as the New York Stock Exchange (NYSE). g. The first time a corporation issues stock to the public. h. Describes (a) the nature of the firm’s business activities, (b) the shares to be issued, and (c) the composition of the initial board of directors.
Which of the following statements is true related to the conversion of a regular corporation to a limited liability company taxed as a partnership? A. In the conversion of a C corporation to an LLC taxed as a partnership, the transfer of appreciated assets from the liquidating corporations is not taxed at the corporate level. B. The corporation can contribute it's assets and liabilities into the new LLC in exchange for ownership interests. The corporation then distributes the LLC interests to it's shareholders in liquidation of the shareholders corporate stock. C. If the corporation distributes it's assets and liabilities to it's shareholders in liquidation of the new corporation, the shareholders are restricted from contributing these assets into the new partnership. D. The existence of substantially appreciated intangibles and goodwill with little or no tax basis has no consequences when converting a C corporation to an LLC
Which of the following does not make it easier for corporation to raise capital? a) limited liability b) double taxation c) perpetual existence d) free transferability
Why would a corporation purchase the stock of another corporation? a. To prevent double taxation of its shareholders b. Because dividends received by a corporation are partially tax-exempt c. It is equivalent to a tax carried forward d. It is equivalent to a tax carried back
Which of the following would be considered an advantage of a corporation? O Control of business decisions O Taxed on your personal income O Easy to start O Limited Liability
An S corporation is subject to the following tax(es). a.Corporate income tax. b.Built-in gains tax. c.Alternative minimum tax. d.None of these choices are correct.
Which statement is incorrect? a. S corporations are treated as corporations under state law. b. S corporations are treated as partnerships for Federal income tax purposes. c. Distributions of appreciated property are taxable to the S corporation. d. All of these choices are correct.
In appropriate situations the IRS may assert That the Corporation be disregarded as a sham or nominee That income reported by the Corporation belongs on the shareholder’s personal Form 1040 Schedule C under the assignment of income principles. Income is reallocated under §482 to unrelated organizations Tax benefits may be denied under §269 if control of a Corporation is acquired for a purpose of avoiding federal income tax. All of the above All of the above except C All of the above except D All of the above except C & D
Hana has prepared the following list of statements about corporations. Identify each statement as true or false. 1. A corporation is an entity separate and distinct from its owners. 2. As a legal entity, a corporation may buy, own, and sell property: borrow money; and enter into legally binding contracts. 3. Shareholders have the right to vote, and to receive dividends on an annual basis. 4. The profit of a corporation is not taxed as a separate entity. 5. Creditors have a legal claim on the personal assets of the owners of a corporation if the corporation does not pay its debts. 6. Ina public company, the transfer of shares from one owner to another requires the approval of either the corporation or other shareholders. The board of directors of a corporation is elected by the shareholders. 7. 8. Corporations are subject to fewer provincial and federal regulations than partnerships or proprietorships. > >
Corporations taxed as S corporations offer the same legal protection to owners as corporations taxed as C corporations. True or false
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True/False. In their Articles of Incorporation, corporations that want to maintain flexibility about future business ventures they might engage in often state a very generic corporate purpose (e.g., “engage in any activity that is lawful for domestic corporations”) or do not include a purpose at all if listing a purpose is optional.