Maria Has a 70% Ownership Interest in a Business Entity

question 5

Multiple Choice

Maria has a 70% ownership interest in a business entity.She is in the 28% tax bracket.The entity incurs $18,000 of meals and lodging expense for Maria,which she believes qualify for exclusion under § 119.Which of the following statements is correct?

• A)If the entity is a partnership,the effect of the $18,000 expenditure by the partnership on Maria's tax liability is an increase of $5,040.
• B)If the entity is a sole proprietorship,the effect of the $18,000 expenditure by the sole proprietorship on Maria's tax liability is $0.
• C)If the entity is a C corporation,the effect of the $18,000 expenditure by the corporation on Maria's tax liability is $0.
• D)Only a.and c.are correct.
• E)a. ,b. ,and c.are correct.

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Definitions:

Mutual Support

A form of help and assistance shared between individuals or groups, often to achieve common goals or overcome similar problems.

Respite Care

Short-term, temporary care provided to individuals needing assistance, offering relief for their usual caregivers.

Social Worker

A professional dedicated to helping individuals, families, and groups improve their well-being and address social and personal challenges.

Hospital Care

The services provided by hospitals to treat patients with preventive, curative, rehabilitative, or palliative care.