Which of the Following Is Unique for an S Corporation

question 36

Multiple Choice

Which of the following is unique for an S corporation?

• A) The profits and losses of an S corporation are not taxed at the corporate level, but shareholders must include these profits and losses on their individual tax returns.
• B) The shareholders of an S corporation must include the firm's profit and losses in their individual income taxes even if no money is distributed to them.
• C) There is a maximum limit on the number of shareholders for an S corporation.
• D) None of the above statements is unique.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of a person's income is taxed, demonstrating how much tax the individual will pay on an additional dollar of income.

Taxable Income

The portion of an individual's or corporation's income that is subject to taxes by the government.

Taxes

Compulsory charges imposed on individuals or entities by governments used to fund public services and government obligations.

Federal Government Spending

Expenditures by the federal government on goods, services, and public projects, part of the country's fiscal policy.