Rachel Is the Sole Member of an LLC,and Jordan Is

question 20

Multiple Choice

Rachel is the sole member of an LLC,and Jordan is the sole shareholder of a C corporation.Both businesses were started in the current year,and each business has a long-term capital gain of $10,000 for the year.Neither business made any distributions during the year.With respect to this information,which of the following statements is correct?

• A)The C corporation receives a preferential tax rate on the LTCG of $10,000.
• B)The LLC must pay corporate tax on taxable income of $10,000.
• C)Jordan must report $10,000 of LTCG on his tax return.
• D)Rachel must report $10,000 of LTCG on her tax return.
• E)None of the above.

---

Definitions:

Voluntary Transfer

The act of willingly transferring ownership or interest in an asset from one party to another without coercion.

Conveyance

The act of transferring ownership of property from one party to another, often involving real estate.

Gift

A voluntary transfer of property for which the donor receives no consideration in return.

Title

The formal right of ownership of property, whether real or personal, tangible or intangible.