Agnes Is Going to Invest $90,000 in a Business Entity

question 13

Essay

Agnes is going to invest $90,000 in a business entity.She will manage the business entity.Her projected share of the loss for the first year is $36,000.Agnes' marginal tax rate is 33%.Determine the cash flow benefit of the loss to Agnes if the business form is:
a.A general partnership.
b.An S corporation.
c.An LLC.
d.A C corporation.

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Definitions:

Encoding Specificity Principle

A principle stating that the retrieval of information is more effective when the conditions at the time of recall match those present during the initial encoding or learning phase.

Law of Effect

A principle in psychology which states that actions which produce rewards are likely to be repeated, while actions that produce discomfort are less likely to be repeated.

Serial Position Effect

A phenomenon in memory that suggests people tend to recall the first and last items in a series best, and the middle items worst.

Primacy Effect

The tendency to remember information at the beginning of a list better than information in the middle or end.