Which of the Following Statements Regarding the Tax Treatment of Start-Up

question 79

Multiple Choice

Which of the following statements regarding the tax treatment of start-up losses is false?

• A) Start-up losses of a business organized as a C corporation create NOL carryforwards, deductible in future years when the business generates a profit.
• B) Start-up losses of a business organized as a partnership are deductible by the partners, potentially generating immediate tax savings.
• C) Start-up losses of a business organized as an S corporation create NOL carryforwards, deductible in future years when the business generates a profit.
• D) Start-up losses of a business organized as an S corporation are deductible by the shareholders, potentially generating immediate tax savings.

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Definitions:

Capital Contributed

This refers to the amount of money or value of other assets that owners or shareholders have provided to a company for use in the business.

Partnership's Work

The projects, tasks, or business operations undertaken by a partnership as a collective.

Partnership Losses

Denotes the deficits shared by partners in a business partnership, reflecting negatively on the partnership's fiscal health and possibly impacting individual partners' finances based on their share.

Secret Profit

A financial benefit that an individual or entity gains without disclosing it to the relevant parties, typically in situations where there is a duty to disclose such benefits.