Each of the Following Is a Factor Used by Courts

question 52

Multiple Choice

Each of the following is a factor used by courts to determine whether to pierce the corporate veil except:

• A) poor management and decision making by an inadequately trained or educated manager.
• B) inadequate capitalization.
• C) evidence of fraud or willful misconduct.
• D) failure to follow necessary corporate formalities.

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Definitions:

Additional Contributions

Extra payments beyond the minimum required, often referring to retirement accounts or other savings plans.

Cash Distribution

The payment of earnings or assets from a corporation or a financial entity to its shareholders, investors, or partners.

Partnership Income

Earnings distributed to the partners of a partnership from the business, which is reported on their personal income tax returns.

Basis

The amount paid for an asset or investment, used to calculate gain or loss for tax purposes.