Ray Is Starting a New Business and Trying to Decide

question 130

Multiple Choice

Ray is starting a new business and trying to decide between a C corporation,S corporation and partnership.Which of the following statements regarding his decision is correct?

• A)An S corporation owner must pay income taxes only on the salary received.
• B)A partner in a partnership is taxed on his or her share of partnership income.
• C)A shareholder in a C corporation is taxed on his or her share of corporate income.
• D)S corporations pay taxes on their current year income.

---

Definitions:

Enforce

To compel obedience to a law, rule, or obligation through the imposition of penalties or other legal mechanisms.

Warranty Liability

Legal obligation of a seller to compensate the buyer for losses caused by defects or failures in the product warranted.

In Blank

Pertains to a document, especially a financial instrument, left partially unfilled or unsigned, allowing for details to be added later.

Transfer Warranties

Legal assurances provided during the transfer of assets, ensuring certain conditions or elements are true or will be upheld.