In Terms of an S Corporation,which of the Following Requirements

question 27

Multiple Choice

In terms of an S corporation,which of the following requirements must be maintained so that the corporation does not lose its tax status?

• A)There can be no more than 120 shareholders in an S corporation.
• B)The shareholders must all be corporate shareholders or partnerships.
• C)The losses and earnings are not to be reported on the shareholders' individual tax returns.
• D)Shareholders must consent in writing to having the corporation taxed as a partnership.

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Definitions:

Average Tax Rate

The portion of total income paid in taxes, calculated by dividing the total amount of taxes paid by the taxpayer's total income.

Taxable Income

The amount of income subject to taxes, determined by subtracting deductions and exemptions from gross income.

Marginal Tax Rate

The percentage of tax applied to your income for each tax bracket in which you qualify, essentially the rate applied to the last dollar of the taxpayer's income.

Federal Income Tax

An annual fee collected by the United States federal government from individuals, corporations, trusts, and other legal entities' earnings.