Sue Has a Great Idea for a Business but Has

question 8

Multiple Choice

Sue has a great idea for a business but has limited financial assets. She wants to retain control over the management of the company, but she needs someone to provide additional financing. Her friend Tom has some money to invest and likes Sue's idea. He would like to share in any profits, but he doesn't have the time for or interest in managing the company and is nervous about the liability involved in running a business. What type of ownership structure would best suit both Sue and Tom?

• A) foreign corporation
• B) general partnership
• C) sole proprietorship
• D) limited partnership

---

Definitions:

50% Bonus

A premium payment of half the worth of an item, salary, or stipulated amount as an additional reward.

Cost Recovery Deduction

A deduction that allows a taxpayer to recover the cost of an investment over time, such as through depreciation or amortization.

Interest Expense

The cost incurred by an entity for borrowed funds, which is deductible under certain conditions for tax purposes.

Property Taxes

Taxes paid by property owners, based on the value of their property, to fund public services.