Which of the Following Statements Regarding Partnerships Versus S Corporations

question 66

Multiple Choice

Which of the following statements regarding partnerships versus S corporations is false?

• A) Ordinary income allocated from both types of passthrough entities is subject to self-employment tax.
• B) Partners are not permitted to be employees of their partnerships, but S corporation shareholders can be employees of their S corporation.
• C) S corporation shareholders are not liable for entity debts, but general partners are liable for partnership debts.
• D) Partnerships have more flexibility than S corporations in the manner in which items are allocated to the owners.

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Definitions:

Total Quality Management

A comprehensive management approach focusing on continuous improvement of processes, products, and services by involving all employees to enhance customer satisfaction.

Business Ecosystems

A dynamic network of interconnected organizations, including suppliers, distributors, customers, and even competitors, that co-evolve and create value through collaboration and competition.

Synergies

The collaboration or concurrence of two or more entities, materials, or factors that leads to a cumulative result surpassing the total of their distinct effects.

Functional

Pertaining to the way in which something operates or performs its duty, often implying effectiveness and efficiency.