Dori and Matt Will Be Equal Owners of a New

question 121

Multiple Choice

Dori and Matt will be equal owners of a new business and will be making cash contributions to start up the business.They expect substantial losses in the early years so the business will take out a loan from the bank which Dori and Matt will have to guarantee.For tax purposes,the preferred business form for these early years will be

• A)a C corporation.
• B)an S corporation.
• C)an LLC,taxed as a partnership.
• D)either an S corporation or an LLC (partnership).The owners will be indifferent between these two forms.

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Definitions:

Market Value

The current price at which an asset or service can be bought or sold in a competitive marketplace.

Financial Statements

Financial Statements are formal records of the financial activities of a business, person, or other entity, presenting the financial performance and position at a point in time and over a period.

Salvage Value

The projected remaining value of an asset upon reaching the end of its productive lifespan, utilized to compute depreciation.

Book Value

The net value of a company's assets minus its liabilities, often used to estimate the company's worth if it were liquidated.