An Important Problem with Corporations Is

question 392

Multiple Choice

An important problem with corporations is

• A) the inability of the government to control and tax the firms.
• B) the possibility of large liabilities for the owners.
• C) the separation of ownership and control.
• D) the difficulties with raising financial capital.

---

Definitions:

Related Party

Individuals or entities that have a close connection to a taxpayer that can affect financial transactions and tax reporting, such as family members or entities under common control.

Deductible

An expense that can be subtracted from income for tax purposes, reducing the taxable income.

Substantially Identical Stock

Stocks that are very similar to each other, the purchase of which can affect the tax treatment of sales for loss.

Wash Sale

A stock transaction where an investor sells securities at a loss and repurchases the same or substantially identical securities shortly before or after the sale.