Jerry and Matt Decide to Form a Business

question 17

Multiple Choice

Jerry and Matt decide to form a business.Jerry will contribute $4,200 for a 35% interest and Matt will contribute $7,800 for a 65% interest.The business will take out a $25,000 loan to cover the balance of their working capital needs.They expect that the business will have a loss of $38,000 for the first year.In the second year,the business will have a profit of $52,000 and it will distribute $5,200 to Matt and $2,800 to Jerry.Jerry is in the 33% marginal tax bracket and Matt is in the 28% marginal tax bracket.Their marginal tax brackets will not change as a result of profit or loss from this business.What is Matt's stock basis at the end of the second year if they organize the business as an S corporation?

• A)$0
• B)$11,700
• C)$28,600
• D)$33,800
• E)$44,850

Recognize the role of network protocols and standards in facilitating communication and data transfer.

Identify authentication methods to secure data and ensure privacy.

Understand regulatory roles and the implications for network access.

Recognize the features and significance of broadband and mobile network connections.

---

Definitions:

Analyze

To examine in detail the structure of something, typically for purposes of explanation and interpretation.

Power Distance

A cultural dimension that describes the extent to which less powerful members within a society accept and expect power to be distributed unequally.

Decisions

The conclusion or resolution reached after consideration.

Uncertainty Avoidance

A cultural dimension that describes the extent to which people in a society are uncomfortable with ambiguity and uncertainty.