Ray Is Starting a New Business with a Friend and Trying

question 9

Multiple Choice

Ray is starting a new business with a friend and trying to decide between a C corporation,S corporation,and partnership.Which of the following statements regarding his decision is correct?

• A)An S corporation owner must pay income taxes only on the salary received.
• B)A partner in a partnership is taxed on his or her share of partnership income.
• C)A shareholder in a C corporation is taxed on his or her share of corporate income.
• D)S corporations pay taxes on their current year income.

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Definitions:

Benefits Packages

A collection of non-wage compensations provided to employees in addition to their normal wages or salaries.

Vesting

Vesting refers to the process by which employees gain non-forfeitable rights to employer-contributed benefits, such as pensions or stock options, over time.

Pension Benefits

Payments made to retirees or their beneficiaries, typically based on years of service and salary, as part of an employer-sponsored retirement plan.

Flexible Benefit Plans

Employee benefit programs that allow individuals to choose from a variety of offerings to create a package tailored to their needs.