Luis Is the Sole Shareholder of a C Corporation, and Eduardo

question 57

Multiple Choice

Luis is the sole shareholder of a C corporation, and Eduardo owns a sole proprietorship. Both businesses were started in 2011, and each business has a long-term capital gain of $20,000 for the year. Neither business made any distributions during the year. With respect to this information, which of the following statements is incorrect?

• A) Eduardo must report a $20,000 long-term capital gain on his 2011 tax return.
• B) Louis's corporation does not receive a preferential tax rate on the $20,000 long-term capital gain.
• C) Luis must report a $20,000 long-term capital gain on his 2011 tax return.
• D) Eduardo receives a preferential tax rate on a long-term capital gain of $20,000.
• E) None of the above.

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Definitions:

Chess Set

A collection of game pieces and board used to play chess, consisting of 32 pieces: 16 each for two players, including kings, queens, rooks, bishops, knights, and pawns.

Probability

The measure or assessment of the likelihood of a particular event or outcome happening based on available evidence or statistical analysis.

Coin Flip

A basic form of randomness used as a method for making a decision, characterized by an equal probability of landing on heads or tails.

Probability

An estimate of the probability that a specific event will take place.