Compared to Corporations, What Is the Primary Disadvantage of Partnerships

question 93

Multiple Choice

Compared to corporations, what is the primary disadvantage of partnerships as forms of business organizations?

• A) The tax rates applied to partnerships are higher than the tax rates applied to corporations.
• B) Any dividends paid to the owners of a partnership business are taxed twice, once at the partnership level and once at the personal, or individual level.
• C) Partnerships generally are more complex to form (start up) than corporations.
• D) Partnerships have unlimited lives whereas corporations do not.
• E) The owners of a partnership, that is, the partners, have unlimited liability when it comes to business obligations whereas the owners of a corporation have limited liability.

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Definitions:

Invested Assets

Assets, including both equity and debt investments, that are held by an entity for earning returns or dividends.

Income From Operations

The profit generated from a business's regular core business operations, excluding any investment and financing activities.

Locomotive Division

A specialized business unit within a company that focuses on the design, manufacture, or maintenance of locomotives and related equipment.

Profit Margin

The percentage of revenue that turns into profit after all expenses have been deducted.