CYCLE!!!!
1. A domestic LLC with at least two members that does not file Form 8832 is automatically
classified as
_ _ _ _ for federal int.Orne tax purposes.
A. An S corporation.
B. A partnership.
C. A qualified joint venture.
D. A personal service corporation. - ANSWER B
2. Don and Selma are married and run a small pet grooming bu~iness together. They want to
treat their business
as a qualified joint venture. They live in a community property state. Which of the following
statements is
correct?
A. They may choose to report their qualified joint venture as a sole proprietorship on two
separate Schedules C,
so long as they file jointly.
B. They may choose to report their qualified joint venture as a single sole proprietorship on
two separate
Schedules C, so long as they file separate tax returns (MFS).
C. They must file a partnership tax return for their business activity.
D. They may file a single Schedule C, listing Don as the sole proprietor one year and Selma as
the sole proprietor
the next year. - ANSWER A
3. In which of the following instances is a partnership not required to obtain a new EIN?
1
, A. The partners decide to incorporate.
B. The partnership is taken over by one of the partners and is subsequently operated as a
sole proprietorship.
C. The general partner ends the old partnership and begins a new one.
D. The partnership adds other business locations. - ANSWER D
4 . Which of the following is considered a drawback of the C corporation entity?
A. It may have many different shareholders.
B. It may have investors who are nonresident aliens.
c. Profits are subject to doufin!! taxation: once at the corporate level and again at the
shareholder level when
distributed as dividends.
D. It is run by a board of directors. - ANSWER C
5. A sole proprietor may not be required to file Schedule SE if his net earnings for 2016 were:
A. Less than $400
B $400 or more
C. Less than $5,000 but more than $400
D. More than $5,000 - ANSWER A
6. Mandy and her friend, Tammy, work together, making beaded necklaces and selling them
at craft shows. They
run their business jointly and attempt to make a profit, but they do not have any type of
formal business
agreement. They share with each other the profits or losses of the business. They received
$24,900 in 2016 from
selling necklaces, and they had $1,900 of expenses. Where and how is the correct way for
Mandy and Tammy to
report their income?
2
1. A domestic LLC with at least two members that does not file Form 8832 is automatically
classified as
_ _ _ _ for federal int.Orne tax purposes.
A. An S corporation.
B. A partnership.
C. A qualified joint venture.
D. A personal service corporation. - ANSWER B
2. Don and Selma are married and run a small pet grooming bu~iness together. They want to
treat their business
as a qualified joint venture. They live in a community property state. Which of the following
statements is
correct?
A. They may choose to report their qualified joint venture as a sole proprietorship on two
separate Schedules C,
so long as they file jointly.
B. They may choose to report their qualified joint venture as a single sole proprietorship on
two separate
Schedules C, so long as they file separate tax returns (MFS).
C. They must file a partnership tax return for their business activity.
D. They may file a single Schedule C, listing Don as the sole proprietor one year and Selma as
the sole proprietor
the next year. - ANSWER A
3. In which of the following instances is a partnership not required to obtain a new EIN?
1
, A. The partners decide to incorporate.
B. The partnership is taken over by one of the partners and is subsequently operated as a
sole proprietorship.
C. The general partner ends the old partnership and begins a new one.
D. The partnership adds other business locations. - ANSWER D
4 . Which of the following is considered a drawback of the C corporation entity?
A. It may have many different shareholders.
B. It may have investors who are nonresident aliens.
c. Profits are subject to doufin!! taxation: once at the corporate level and again at the
shareholder level when
distributed as dividends.
D. It is run by a board of directors. - ANSWER C
5. A sole proprietor may not be required to file Schedule SE if his net earnings for 2016 were:
A. Less than $400
B $400 or more
C. Less than $5,000 but more than $400
D. More than $5,000 - ANSWER A
6. Mandy and her friend, Tammy, work together, making beaded necklaces and selling them
at craft shows. They
run their business jointly and attempt to make a profit, but they do not have any type of
formal business
agreement. They share with each other the profits or losses of the business. They received
$24,900 in 2016 from
selling necklaces, and they had $1,900 of expenses. Where and how is the correct way for
Mandy and Tammy to
report their income?
2
