1. Which of the following is an advantage of a sole proprietorship over other business forms?

A) tax-exempt treatment of fringe benefits

B) the deduction for compensation paid to the owner

C) ease of formation

D) low tax rates on dividends

2.

NEIU Corporation is a C corporation with earnings of $500,000. It paid $150,000 in dividends to its sole shareholder, Victor. Victor also owns 100% of BiCarbon Corporation, an S corporation. BiCarbon had net taxable income of $75,000 and made a $25,000 distribution to Victor. What income will Victor report from NEIU and BiCarbon's activities?

A) $75,000

B) $150,000

C) $175,000

D) $225,000