Identify Which of the Following Statements Is True

question 88

Multiple Choice

Identify which of the following statements is true.

• A) 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.
• B) 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.
• C) Special allocations of ordinary income or loss and separately stated items that are available for partnerships are also permitted with S corporations.
• D) All of the above are false.

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Definitions:

Corporate Tax Rate

The corporate tax rate is the percentage of a corporation's income that is seized by the government as tax.

Net Income

The total earnings of a company after all expenses and taxes have been subtracted from total revenue.

Notes Payable

A written promise to pay a certain amount of money, usually including interest, by a specified date or on demand.

Net Purchases

The total amount of purchases after subtracting returns, allowances, and discounts.