Which of the Following Statements Regarding Limited Liability Companies Is

question 2

Multiple Choice

Which of the following statements regarding limited liability companies is false?

• A) Every member of an LLC has limited liability for the LLC's debts.
• B) An LLC with only one member is generally treated as a corporation for income tax purposes.
• C) An LLC with more than one member is generally treated as a partnership for income tax purposes.
• D) State laws do not limit the number of members or the type of entity that can be a member in an LLC.

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Definitions:

After-Tax Discount Rate

The rate used to discount future cash flows to their present value, adjusted for the impact of taxes.

Income Tax Rate

The percentage of taxable income that individuals or corporations are required to pay to the government.

Working Capital

The difference between a company's current assets and current liabilities, indicating the liquidity and operational efficiency.

Straight-Line Depreciation

A way of allocating the financial burden of a material asset over its effective lifespan in identical yearly portions.