Steve and Karen Are Going to Establish a Business Entity

question 129

Multiple Choice

Steve and Karen are going to establish a business entity. They expect the business to be very successful in the long-run, but project losses of approximately $100,000 for each of the first five years. Due to potential environmental concerns, limited liability is a requisite for the owners. Which form of business entity should they select?

• A) General partnership.
• B) Limited partnership.
• C) C corporation.
• D) S corporation.
• E) Any of the above should satisfy Steve and Karen.

---

Definitions:

Testamentary Capacity

The legal and mental ability of a person to make or alter a valid will, often requiring understanding of the nature of the will, one's assets, and the identity of beneficiaries.

Orderly Plan of Disposition

An orderly plan of disposition refers to a strategically organized method for selling off a business's assets, often used in liquidation scenarios.

Express Trusts

Express Trusts are trusts created intentionally by the settlor, typically through a written document, specifying how assets placed into the trust should be managed and distributed.

Inter Vivos Trust

A trust created during the lifetime of the grantor, allowing the grantor to transfer assets before death for the benefit of future beneficiaries.