Entities Overview

Question 1

A buisness entity may be classified as a

1. ___________
2. _______ _________ _______
3. _______ ___________
4. _______ ___________
5. ____ ______________

Answer 1

1. corporation
2. limited liability company
3. general partnership
4. limited partnership
5. sole proprietorship

Question 2

Business owner legally for corporations by filing ________ __ _____________

Answer 2

articles of incorporation

Question 3

Which entity types of businesses are considered legal entities separate from their owners?

Answer 3

corporations
LLC’s
general partnerships

Question 4

Limited liability companies are created by filing either ___________ __ ____________ or ________ __ ____________

Answer 4

certificate of organization

articles of organization

Question 5

A written agreement among partners to form a general partnership is called a ___________ _________

Answer 5

partnership agreement

Question 6

True or False:

A general partnership my be formed informally without a written agreement.

Answer 6

True

Question 7

Limited partnerships are usually organized by written agreement and typically must file a ___________ __ _______ ___________

Answer 7

certificate of limited partnership

Question 8

For a corporation, who is responsible for paying the liabilities? (corporation or owners)

LLC’s?
partnerships?
sole proprietorship?

Answer 8

the corporation

LLC’s
general partners
owner

Question 9

True or False:

Limited partners are responsible to pay liabilities for the partnership.

Answer 9

False

Question 10

Individual business owners may organize their businesses as ______-______ ____ and receive the liability protection afforded LLC members.

Answer 10

single-member LLCs

Question 11

State whether the entity type is flexible or nonflexible:
corporations
LLC
general partnership
limited partnership
sole proprietor

Answer 11

c - not flexible
llc - flexible
gp - flexible
lp - flexible
sp - n/a

Question 12

What entity type is suitable for initial public offering (IPO)?

Answer 12

corporation

Question 13

True or False:

A business’s legal form my be different from its tax form.

Answer 13

True

Question 14

For tax purposes, business entities can be classified as either ________ _________ _______ or ____-_______ ________

Answer 14

separate taxpaying entities

flow-through entities

Question 15

(Separate taxpaying or Flow-through) entities pay tax on their own income.

Answer 15

Separate taxpaying

Question 16

(Separate taxpaying or Flow-through) entities don’t pay taxes because income flows to the business owners.

Answer 16

Flow-through

Question 17

Entities that are legal corporations under state law are, by default, treated as __ ____________ for tax purposes; subject to tax provisions in Subchapter __ (and not Subchapter __) of the Internal Revenue Code

Answer 17

C corporations
C
S

Question 18

C corporation report their taxable income to the IRS on Form ____

Answer 18

1120

Question 19

Shareholders of legal corporations may qualify to make a special tax election known as an “__” election, thus permitting the corporation to be taxed as a ____-_______ entity called an __ ___________.

Answer 19

S
flow-through
S corporation

Question 20

S corporations and their shareholders are subject to tax provisions in Subchapter __ of the Internal Revenue Code

Answer 20

S

Question 21

S corporations report the results of their operations to the IRS on Form _____

Answer 21

1120S

Question 22

Unincorporated entities are, by default, treated as ____-_______ entities; however, owners of an unincorporated entity can still elect to have their business taxed as a __ corporation instead.

Answer 22

flow-through

C

Question 23

______________ ____-_______ entities are treated for tax purposes as either partnerships, sole proprietorships, or disregarded entities.

Answer 23

Unincorporated flow-through

Question 24

What is a disregarded entity?

Answer 24

unincorporated entity with one owner that is considered to be the same entity as the owner

Question 25

Unincorporated entities (including LLCs) with more than one owner are treated as ____________

Answer 25

partnerships

Question 26

Income from businesses taxed as sole proprietorships is reported on ________ __ of Form ____

Answer 26

Schedule C

1040

Question 27

Unincorporated entities with only one corporate owner, typically a single-member LLC, are ___________ for tax purposes; income and losses from this single, corporate-member LLC is reported as if it had originated from a division of the corporation and is reported directly on the single-member corporation’s return

Answer 27

disregarded