A Worker May Prefer to Be Treated as an Independent

question 40

Multiple Choice

A worker may prefer to be treated as an independent contractor (rather than an employee) for which of the following reasons:

• A)Avoids the overall limitation (50%) as to business meals.
• B)All of the self-employment tax is deductible for income tax purposes.
• C)Work-related expenses of an independent contractor are deductible for AGI.
• D)A Schedule C does not have to be filed.
• E)None of these.

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Definitions:

Procedures for Incorporation

The standardized legal steps and requirements followed to legally form and register a corporation with the state or appropriate authority.

Challenge

A call to engage in a competition or contest.

Corporation

A legal entity separate from its owners, offering limited liability to its shareholders and able to own property and sign contracts.

Close Corporation

A corporation whose shareholders are limited to a small group of persons, often family members.