Which of the following statements is CORRECT? oa Most businesses (by number and total dollar sales) are organized as proprietorships or partnerships because it is easier to set up and operate one of these forms rather than as a corporation. However, if the business gets very large, it becomes advantageous to convert to a corporation, primarily because corporations have important tax advantages over proprietorships and partnerships b. Due to limited liability, unlimited lives, and ease of ownership transfer, the vast majority of us businesses in terms of number of businesses are organized as corporations. o Corporate stockholders are exposed to unlimited liability Large corporations are taxed more favorably than proprietorships 5. Due to legal considerations related to ownership transfers and limited ability, which affect the folly to attract capital most business nebsured by dollar sales is conducted by corporations in spite of forte corporations less favorable tax treatment Griffey Communications recently realized $95,000 in operating income. The company had interest income of $20,000 and realized $70,000 in dividend income. The company's interest expense was $30,000. Its corporate tax rate is 25%. Griffey is a small company, so it is not subject to the interest expense deduction limitation Assume a 50% dividend exclusion for taxes on dividends. O a, 546,250 b. $21,250 O c.$38.750 d. $37,500 O e $30,000 Which of the following statements is CORRECT? oa Most businesses (by number and total dollar sales) are organized as proprietorships or partnerships because it is easier to set up and operate one of these forms rather than as a corporation. However, if the business gets very large, it becomes advantageous to convert to a corporation, primarily because corporations have important tax advantages over proprietorships and partnerships b. Due to limited liability, unlimited lives, and ease of ownership transfer, the vast majority of us businesses in terms of number of businesses are organized as corporations. o Corporate stockholders are exposed to unlimited liability Large corporations are taxed more favorably than proprietorships 5. Due to legal considerations related to ownership transfers and limited ability, which affect the folly to attract capital most business nebsured by dollar sales is conducted by corporations in spite of forte corporations less favorable tax treatment Griffey Communications recently realized $95,000 in operating income. The company had interest income of $20,000 and realized $70,000 in dividend income. The company's interest expense was $30,000. Its corporate tax rate is 25%. Griffey is a small company, so it is not subject to the interest expense deduction limitation Assume a 50% dividend exclusion for taxes on dividends. O a, 546,250 b. $21,250 O c.$38.750 d. $37,500 O e $30,000
