Your Three Friends from Wyoming Inherited an Old Dude Ranch

question 118

Multiple Choice

Your three friends from Wyoming inherited an old dude ranch. They now plan to turn it into a pasture for retired racehorses. Serenity Stables wants to open its doors by spring of 2020. After going to several small business seminars, your friends are certain they need limited liability. The high-risk, labor-intensive business will require a sizeable investment including an air-conditioned barn, several fenced-in pastures, and loads of animal feed. You explain to them that LLC ownership requires owners to pay self-employment taxes on the entire amount of earnings. You are fairly certain this is one tax liability your friends would like to avoid. You instead recommend

• A) sole proprietorship.
• B) general partnership.
• C) limited liability company.
• D) S corporation.

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Definitions:

Cynical View

A perspective that generally mistrusts or doubts the sincerity and goodness of human motives and actions.

Negative Affectivity

Describes a personality trait characterized by a pervasive pattern of negative emotions and poor self-concept.

Instrumental Value

Values or beliefs that are viewed as a means to achieving desired ends, guiding behavior towards achieving certain goals.

Self-Respect

A positive valuation of oneself, characterized by feelings of worth and dignity.