An Important Distinction Between Corporate and Unincorporated Businesses Is That

question 70

Multiple Choice

An important distinction between corporate and unincorporated businesses is that

• A) corporations have unlimited life, while unincorporated businesses are limited to the life spans of their owners.
• B) income earned by corporations is not subject to the double taxation of unincorporated businesses.
• C) corporations are subject to reorganization when major stockholders withdraw.
• D) corporations have more trouble raising large sums of money than unincorporated businesses.
• E) corporations issue common stock, while unincorporated businesses issue preferred stock.

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Definitions:

Federal Income Tax

A tax levied by the United States federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Medical Insurance

Insurance that reimburses the costs associated with medical and surgical care received by the insured individual.

Withholding Allowance

A claim made by employees on the W-4 form to reduce the federal income tax withheld from their paycheck.

Taxable Income

The portion of an individual's or business's income that is subject to income tax, after exemptions and deductions.