1. True or False: A general partner in a limited partnership is not protected from the partnerships liabilities.

2. What kind of an entity is a limited liability company for the purpose of taxing its income?

3. What is the difference between recourse and nonrecourse debt for a partnership?

4. Indicate by a PRP if the characteristic applies to a sole proprietorship, an SC if it applies to an S corporation, and a PAR if it applies to a partnership, and N if it does not apply to any of the three businesses. A characteristic can apply to more than one entity.

A. ________Operating income taxed to entity.

B. ________Owners pay self-employment taxes on income from entity.

C. ________Gain recognized by owners on liquidation of entity.

D. ________ Owner may deduct losses if there is basis because of loans to the entity by the owner.

E.________ Must be formed under state law.

F. ________Owners salary is subject to FICA taxes.

G. ________Owners may participate in all tax-free employee fringe benefits.

H. ________Formation of the entity is generally a tax-free event.