Identify Which of the Following Statements Is True

question 49

Multiple Choice

Identify which of the following statements is true.

• A)Long-term capital gains may be subject to double taxation if the gains are subject to both the excess net passive income tax rules and the built-in gains tax rules.
• B)Special allocations of ordinary income or loss and separately stated items that are available for partnerships are also permitted with S corporations.
• C)When an S corporation's shares are sold by a shareholder during a tax year, the transferee's share of the earnings is reported from the day after the transfer date through the end of the tax year.
• D)All of the above are false.

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Definitions:

General Partner(s)

Individuals in a partnership who have unlimited liability and are involved in the day-to-day management of the business.

Limited Partner(s)

Investors in a partnership who have limited liability to the extent of their investment and do not participate in day-to-day management.

Limited Partners

Individuals in a partnership who invest money but are not involved in daily management, and whose liability is limited to the amount of their investment.

General Partners

General partners are individuals in a partnership who are responsible for the operations of the business and are personally liable for the partnership's debts and obligations.