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.

---

Definitions:

Fixed Costs

Expenses that remain constant regardless of production or sales volume, including rent, salaries, and insurance costs.

Operating Income

An indication of a company's profitability from its core business operations, excluding income and expenses from unusual, non-operational activities.

Contribution Margin

The amount by which a product's sales price exceeds its variable costs, contributing to covering fixed costs and generating profit.

Fixed Costs

Expenses that do not change in total despite fluctuations in the level of output or sales volume, such as rent or salaries.