Identify a Disadvantage of Being an S Corporation

question 12

Multiple Choice

Identify a disadvantage of being an S corporation.

• A) Estates can be shareholders.
• B) Losses flow through immediately to the shareholders.
• C) Section 1202 treatment (Qualified Small Business Stock) is not available.
• D) Tax-exempt income flows through as excludible to shareholders.
• E) None of the above is a disadvantage of the S election.

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Definitions:

Incidental Beneficiary

One who unintentionally gains a benefit from a contract between other parties.

Holder

An individual or entity that legally owns or possesses a document, such as a contract or financial instrument.

Drawer

The party that writes an order or the person who writes a check.

Accommodation Party

A party who signs an instrument to provide credit for another party who has also signed the instrument.