Dori and Matt Will Be Equal Owners of a New

question 563

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

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Definitions:

Intimate

Relating to a very close personal relationship characterized by deep emotional or physical bonding, often used to describe friendships, romantic relationships, or family ties.

Bureaucracy

A type of formal organization characterized by an authority hierarchy, a clear division of labor, explicit rules, and impersonality.

College

An institution of higher education offering undergraduate degrees; often a part of a larger university.

Criterion

A standard or principle by which something may be judged or decided, often used in assessments or decision-making processes.