CORPORATE PARTNERSHIP ESTATE AND
GIFT TAXATION 1ST EDITION PRATT FINAL
PAPER 2026 EXAM FULL QUESTIONS AND
CORRECT ANSWERS ALREADY PASSED
⩥ What are the advantages of a sole proprietorship? Answer: No state
incorporation fees, no formalities, and easier tax management.
⩥ What are the disadvantages of a sole proprietorship? Answer: Personal
liability for debts and liabilities.
⩥ What defines a general partnership? Answer: An association of two or
more persons to carry on as co-owners of a business for profit.
⩥ What is a fiduciary duty in a general partnership? Answer: A special
duty owed to another partner, requiring honesty, loyalty, and good faith.
⩥ What are the advantages of a general partnership? Answer: Easy to
start, same tax advantages as sole proprietorship, and flexibility with
partnership agreements.
⩥ What are the disadvantages of a general partnership? Answer:
Complex winding up process and potential liability for partners' actions.
, ⩥ What is the difference between a partnership and a joint venture?
Answer: A partnership is ongoing, while a joint venture is for a single
enterprise or activity.
⩥ What is a limited partnership? Answer: A partnership with at least one
general partner and one limited partner, providing better protections for
investors.
⩥ What is the main advantage of a limited partnership? Answer: Limited
partners are not liable for debts beyond their investment.
⩥ What is a limited liability partnership (LLP)? Answer: A partnership
that provides limited liability protections, typically for professionals.
⩥ What is an LLC? Answer: A Limited Liability Company that
combines the simplicity of a partnership with the liability protections of
a corporation.
⩥ What are the advantages of an LLC? Answer: Limited liability,
perpetual life, and the ability to be taxed like a partnership.
⩥ What is the process to create an LLC? Answer: Draft Articles of
Organization, name the LLC, state its purpose, duration, and registered
agent, then file with the Secretary of State.
GIFT TAXATION 1ST EDITION PRATT FINAL
PAPER 2026 EXAM FULL QUESTIONS AND
CORRECT ANSWERS ALREADY PASSED
⩥ What are the advantages of a sole proprietorship? Answer: No state
incorporation fees, no formalities, and easier tax management.
⩥ What are the disadvantages of a sole proprietorship? Answer: Personal
liability for debts and liabilities.
⩥ What defines a general partnership? Answer: An association of two or
more persons to carry on as co-owners of a business for profit.
⩥ What is a fiduciary duty in a general partnership? Answer: A special
duty owed to another partner, requiring honesty, loyalty, and good faith.
⩥ What are the advantages of a general partnership? Answer: Easy to
start, same tax advantages as sole proprietorship, and flexibility with
partnership agreements.
⩥ What are the disadvantages of a general partnership? Answer:
Complex winding up process and potential liability for partners' actions.
, ⩥ What is the difference between a partnership and a joint venture?
Answer: A partnership is ongoing, while a joint venture is for a single
enterprise or activity.
⩥ What is a limited partnership? Answer: A partnership with at least one
general partner and one limited partner, providing better protections for
investors.
⩥ What is the main advantage of a limited partnership? Answer: Limited
partners are not liable for debts beyond their investment.
⩥ What is a limited liability partnership (LLP)? Answer: A partnership
that provides limited liability protections, typically for professionals.
⩥ What is an LLC? Answer: A Limited Liability Company that
combines the simplicity of a partnership with the liability protections of
a corporation.
⩥ What are the advantages of an LLC? Answer: Limited liability,
perpetual life, and the ability to be taxed like a partnership.
⩥ What is the process to create an LLC? Answer: Draft Articles of
Organization, name the LLC, state its purpose, duration, and registered
agent, then file with the Secretary of State.
