What Statement Is Correct with Respect to an S Corporation

question 94

Multiple Choice

What statement is correct with respect to an S corporation?

• A) There is no advantage to elect § 1244 stock.
• B) An S corporation can own up to 85% of an insurance company.
• C) A resident alien may be a shareholder.
• D) A voting trust arrangement is not available.
• E) None of the above statements is true.

---

Definitions:

Net Income

Net Income is the total profit of a company after all expenses have been deducted from revenues.

Effective Tax Rate

The average rate at which an individual or a corporation is taxed, calculated by dividing the total tax by the taxable income.

Tax Expense

The total amount of taxes owed by an individual or corporation as a result of taxable activities or income during a fiscal year.

Income Before Taxes

The total revenue of a company minus all expenses except for income tax expenses.