You 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 BusinessChristopher started a tutoring website. After a few months, a publishing company filed a lawsuit against his company for copyright infringement. Christopher had to shut down his business and lost all his personal assets in the process. Purple Consulting has five consultants in the firm. The company’s annual revenue is around $500,000. Income is distributed among all consultants, and each is personally liable for claims if the company goes under. Nicholas, the CEO of a beverage company, is required to certify the accuracy of information provided in the company’s quarterly reports. Paradigm Media is a company run by a group of new media professionals. The owners of the company do not have any personal liability and file taxes based on individual income.

Person C lost all his assets when his company shut down. Only a single proprietorship companies lose…

Answered: You come across different kinds of…

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter13: Choice Of Business Entity—general Tax And Nontax Factors/formation

Section: Chapter Questions

Problem 57P

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You 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 Scenario	Type of Business
Christopher started a tutoring website. After a few months, a publishing company filed a lawsuit against his company for copyright infringement. Christopher had to shut down his business and lost all his personal assets in the process.
Purple Consulting has five consultants in the firm. The company’s annual revenue is around $500,000. Income is distributed among all consultants, and each is personally liable for claims if the company goes under.
Nicholas, the CEO of a beverage company, is required to certify the accuracy of information provided in the company’s quarterly reports.
Paradigm Media is a company run by a group of new media professionals. The owners of the company do not have any personal liability and file taxes based on individual income.

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

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