If You Were Seeking an Entity with the Most Favorable

question 81

Multiple Choice

If you were seeking an entity with the most favorable tax treatment regarding (1) the number of owners allowed, (2) the flexibility to select your accounting period, and (3) the availability of preferential capital gains rates when selling your ownership interest, which entity should you decide to use?

• A)C corporation.
• B)S corporation.
• C)Partnership.
• D)Sole proprietorship.

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Definitions:

Bankruptcy Filing

A legal process through which individuals or businesses unable to meet their debts can seek relief from some or all of their obligations.

Financially Distressed

A condition in which a company or individual cannot generate revenue or income, which results in challenges in paying its financial obligations.

Direct Cost

Expenses that can be directly tied to the production or sale of a specific product or service.

Bankruptcy

A legal process involving a person or business that is unable to repay outstanding debts, resulting in the selling off of assets to pay creditors.