1.When a corporation distributes its profits to its owners, it does so through the payment of a dividend for each share of stock to the owner of the share of stock. Why is this referred to as "double taxation"?

a.The corporation files its own tax return and pays taxes on the profits earned by the company

b.The tax paid by the shareholder is calculated at twice the normal rate for ordinary income

c.The dividend received by the shareholder may also be subject to state and local taxes

d.None of these choices.

2.What income tax advantage is available to all forms of partnership and a limited ___ company that is not available to a corporation?

a.Partnerships and limited liability companies are exempt from income taxes

b.Partnerships and limited liability companies pass their profits and losses through to the owners of the firm who report these items on their individual tax returns

c.A partnership can organize itself as a Subchapter S partnership

d.All of these choices

3.Homer's Remodeling LLC, is a member managed LLC. A dispute among the members to the proper distribution of the profits of the business to the members. If the members cannot resolve the dispute and the matter is submitted to a court for resolution, a court will look to what source to resolve the dispute?

a.The Membership Agreement

b.The Company Agreement

c.The Operating Agreement

d.None of these choices

4.Ned and Orin do business as Pest Control Partners. Ned and Orin purchase a truck to be used in the business. Under the traditional common law rule of partnerships, Pest Control Partners would be treated as:

a.An aggregate of the individual partners

b.A natural person

c.A separate legal entity from tis owners

d.None of these choices

5.Kris is a member of Laboratory Services LLC, a member managed Limited Liability Company. Kris can participate in the firm's management:

a.Only to the extent that she assumes liability for the firm's debts

b.Only to the extent of her investment in the frim

c.To no extent

d.To any extent

6.The United States government has created the United States Postal Service, the Tennessee Valley Authority and AMTRAK to perform public purposes. These entities have been organized as corporations under a corresponding deferral statue that created an of these entities. These corporations are classified as:

a.Public corporations

b.Special purpose corporations

c.Social purpose corporations

d.None of these choices

7.A group of entrepreneurs wish to start a business and they decide to incorporate the business pursuant to the laws of the State of Florida. In Florida, this corporation will be referred to as:

a.An original corporation

b.A traditional corporation

c.An interest corporation

d.A domestic corporation