Which of the Following Statements Regarding Limited Liability Companies Is

question 56

Multiple Choice

Which of the following statements regarding limited liability companies is true?

• A)Just like an S corporation,an LLC member's share of ordinary income is not subject to self-employment taxes.
• B)Just like an S corporation,an LLC is restricted to 100 members.
• C)Because LLCs are a relatively new organizational form,many tax questions concerning their operation have yet to be resolved.
• D)Just like a limited partnership,only LLC members who are not actively involved in the entity's business activities have limited liability for the LLC's debts.

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Definitions:

Interest Payment

The payment made by a borrower to a lender for the privilege of borrowing money, usually expressed as a percentage of the principal amount.

Present Value

The current estimated value of future money amounts or cash flow sequences, based on a specified return rate.

Annual Interest Rate

The percentage of the principal that a borrower must pay as interest over the course of one year, affecting the total cost of loans or the yield from investments.

Annuity

A monetary instrument offering regular, fixed payments to someone, commonly employed to generate a revenue flow for retired individuals.