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- 1. Which of the following is not taxable income? a.Interest b.Hobby income c.Child support payments d.Royalties e.Dividends 2. Generally, for an activity to be treated as a trade or business, which of the following is required: a.No more than intermittent effort toward the activity b.Regular and continual effort designed to seek profit c.Always generate a profit d.Organization as a corporation or partnership 3. To be deductible as the cost of special work clothing or uniforms: a.The clothing need not be required as a condition of the job, but must not be suitable for everyday use. b.The clothing must be required as a condition of the job, but can also be suitable for everyday use. c.The clothing must not be suitable for everyday use and must be required as a condition of the job. d.Only the cost of the clothing is included; upkeep is not deductible.Which of the following statements is true of a sole proprietorship? A. A sole proprietorship has to pay business income taxes. B. A sole proprietorship joins two or more individuals as co−owners. C. The sole proprietor is personally liable for the liabilities of the business. D. A sole proprietorship is taxed separately from the owner.Which type of business organisation has a separated legal entity from its owners, and the owners are not liable for the debt of the business? Select one: A. Limited company B. Company C. Partnership D. Sole proprietorship
- Which Which of the following statements is correct about a sole trader? a. Pays corporation tax on business profits b. Must register his/her business as a separate legal entity C. Must provide a profit share to employees d. Is liable personally for the consequences of any legal action against the businesWhat is the legal relationship of a sole proprietorship to its owner? A. The owner and the sole proprietorship are considered to be the same legal entity. B. A sole proprietorship can survive the death of its owner. C. The owner can shelter profits of a sole proprietorship from taxation. D. Then owner is not liable for debts incurred by the sole proprietorship.From a tax perspective, and disregarding other issues such as limited liability, does it always make sense to operate businesses in a separate business entity, such as a C corporation? When might it be better to be a sole proprietor?
- A benefit of a sole proprietorship is that liability is limited to that of the business financial and assets not the personal assets of the owner/proprietor. true or falseWhich of the following is true for a Limited Liability Company (LLC)? business income is taxed at the corporate rate the owners have unlimted liability the company is limited in its liability business incomes is taxed at the individuals personal rate none of the aboveWhich of the following characteristics best describes a corporation? a. A business with a single owner b. Is not taxed c. Stockholders not personally liable for entity’s debts d. Not a separate taxable entity
- Owners in which of the following forms of business have unlimited liability? a. sole proprietorships b. limited partnerships c. corporations d. LLCsHow do business owners determine their taxable income from their business ventures? How does this translate to not-for-profit entities?1. Using either the “hobby loss” (hobby vs. “trade or business”) or the “day trader” (vs. investor) issue, explain how to identify taxpayers who properly should be claiming “sole proprietor” status and reporting the results of their activities on Schedule C.