7. The following are true regarding Limited Liability Companies, except?

a. The default tax treatment for a single member limited liability company is that of a disregarded entity.

b. The default tax treatment for a multi-member limited liability company is that of a partnership.**

c. A multi-member Limited Liability Company can elect tax treatment as a C corporation or an S corporation.

d. For legal purposes, a Limited Liability Company is treated the same as the type of entity elected for tax purposes. *

8. If a business has only one owner, it cannot be classified as?

a. Corporation

b. Partnership *

c. Limited Liability Company

d. Sole Proprietorship

9. What is a difference between a Partnership and an S corporation?

a. A partnership can issue preferred stock***

b. A partnership can have an owner who is a corporation

c. A partnership is not a flow through entity

d. A partnership cannot have limited liability for any of its owners *

10. What is the default tax treatment for a multi-member Limited Liability Company?

a. Partnership *

b. Corporation

c. Disregarded Entity

d. Sole Proprietorship

11. Which of the following best describes how the IRS views each member of a qualified joint venture for federal tax purposes?

a. General partner**

b. Limited partner *

c. Sole Proprietor

d. Shareholder of a corporation

12. Which of the following entities is not a flow through entity?

a. Corporation*

b. S Corporation

c. Partnership

d. Sole Proprietorship

13. Who is responsible for the liabilities of a Corporation?

a. The chief executive officer

b. Shareholders *

c. The corporation

d. The board of directors

14. Who is responsible for the operations of a limited partnership?

a. General Partner***

b. Limited Partner

c. All partners are equally liable *

d. Managing member

15. Distributions paid to an S corporation shareholder employee are not wages, and therefore not subject to self-employment tax if:

a. The shareholder receives reasonable wages for services performed.***

b. The shareholder performs services, and receives no compensation.

c. All of the business income is from the personal services of the shareholder. *

d. None of the income is from capital or equipment.