Greg and Samantha Plan to Establish a Business in Which

question 78

Multiple Choice

Greg and Samantha plan to establish a business in which they will both materially participate.They are both in the 32% marginal tax bracket.Although they expect the business to be very successful in the long-run, they project losses of approximately $100,000 for each of the first five years.Due to potential environmental concerns, limited liability is very important for the owners.Which form of business entity should they select considering both tax and nontax factors?

• A)General partnership
• B)Limited partnership
• C)S corporation
• D)It makes no difference; any of the above should satisfy Greg and Samantha.

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Definitions:

Seasonal Discounts

Price reductions offered on products or services during specific seasons or times of the year to boost sales or clear inventory.

Encourage Buyers

The practice of motivating potential customers to purchase a product or service through various strategies, including marketing, promotions, and incentives.

Stock Inventory

A detailed list of goods or materials a company has in stock, a critical component for managing supply chain and meeting customer demand.

Trade Terms

Agreed conditions between a buyer and a seller regarding the delivery, payment, and ownership of goods.