In an S Corporation, Shareholders

question 629

Multiple Choice

In an S corporation, shareholders

• A) are taxed only on dividends.
• B) are only taxed on salaries.
• C) are taxed on their proportionate share of earnings.
• D) may allocate income among themselves in order to consider special contributions.

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Definitions:

Straight Bankruptcy

another term for Chapter 7 bankruptcy, where a debtor's assets are liquidated to pay off creditors.

Liquidation

The process of winding up a company's financial affairs by selling off assets to pay creditors and distribute any remaining assets to the shareholders.

Adjustment of Debts

A legal process by which an individual or business in financial distress can reorganize or negotiate their debt obligations to manage or reduce them.

Nondischargeable Debts

Financial obligations that cannot be eliminated through bankruptcy proceedings, such as certain taxes, fines, and student loans.