Question 2

A corporation is the only type of business that must pay its own income taxes on profits

True

False

Question 3

Fill in the blank:

The corporation must file a corporate tax return, IRS Form _______, and pay taxes at a corporate income tax rate on any profits.

1065

1040

1120

1114

Question 4

If the corporation's owners work for the corporation, they pay individual income taxes on their salaries and bonuses like regular employees of any company.

True

False

Question 5

If a corporation distributes dividends to the owners, they must report and pay self employment income tax on these amounts. And because dividends, unlike salaries and bonuses, are not tax-deductible, the corporation must also pay taxes on them.

True

False

Question 6

Generally, dividends are taxed twice -- once to the corporation and again to the shareholders

True

False

Question 7

A personal service corporation with taxable income of $100,000 will have a tax liability of $22,250.

True

False

Question 8

Section 351 States: No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control (as defined in section 368(c)) of the corporation.

True

False