If an S Corporation Never Operated as a C Corporation

question 12

True/False

If an S corporation never operated as a C corporation, it may earn passive investment income without fear of an involuntary S election termination.

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Definitions:

Sound Argument

An argument that is both valid (correctly structured) and has all true premises.

Sound Argument

An argument that is both valid (correctly structured) and has true premises, leading to a true conclusion.

Valid

An argument based on deduction that is structured in a way that, if the premises are considered true, then the conclusion necessarily follows as true.

False Premise

A logical fallacy where an argument is built on a statement that is assumed to be true but is actually false, misleading, or unfounded.