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:

Inverted-U Theory

A hypothesis that suggests a relationship between a particular factor and an outcome starts positively at lower levels, peaks, and then turns negative as the factor increases further.

Technologically Progressive

Characterized by advances in technology which contribute to improved efficiency and productivity.

R&D Spending

Financial investments allocated towards research and development activities with the aim of advancing innovation, creating new products, or improving existing ones.

Imitation

The act of mimicking or replicating someone else's actions, strategies, products, or behaviors.