Which of the Following Statements Is True of Corporations

question 29

Multiple Choice

Which of the following statements is true of corporations?

• A)Income of all corporations is taxed in the same way that income of partnerships is taxed.
• B)A corporation's charitable contribution deduction is limited to 25 percent of the corporation's taxable income.
• C)Capital losses of a corporation may be deducted from ordinary income, subject to an annual limitation.
• D)If a corporation has a long-term capital loss that is carried back, it is treated as a short-term capital loss.
• E)A corporation may deduct organizational expenditures as they are incurred.

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Definitions:

Government Expenditures

The total amount of spending by the government for its operations, public services, and the acquisition of goods and services.

Market Equilibrium

The state in which market supply and demand balance each other, resulting in stable prices.

Deadweight Loss

The loss of total social surplus that occurs when the market outcome is not efficiently allocated, typically due to market failures or interventions.

Producer Surplus

Producer surplus is the difference between the amount producers are willing to accept for a good or service and the amount they actually receive, measured by the area above the supply curve and below the market price.