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D557 Corporate Taxation Pre-Assessment
Questions with Correct Answers | Updated
(100% Correct Answers)
An S Corporation forgoes it "S" status and becomes a "C"
Corporation.
What is the tax consequence of this change on the shareholders of
the corporation?
1. Its shareholders will no longer pay self-employment tax on their
allocated income.
2. Its shareholders will no longer pay any taxes on distributions
made by the corporation.
3. Its shareholders will no longer be eligible for deductions for
qualified business income.
4. Its shareholders will no longer be eligible for dividend received
deduction for any receipt of distribution. Answer: 3. Its shareholders
will no longer be eligible for deductions for qualified business
income.
A group of general partners operating a successful general
partnership business is considering forming a C Corporation.
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,2
What tax consequence should be considered by owners of a general
partnership wanting to change to a C Corporation?
1. They will not pay self-employment taxes on their share of the
profits.
2. They will not have to pay separate entity-level income tax.
3. Their remunerations from the corporations will not be subject to
payroll taxes.
4. Their receipt of distributions from the corporation is not subject
to separate tax. Answer: 1. They will not pay self-employment taxes
on their share of the profits
What must a sole proprietor consider before converting their
business to either a C Corporation or a single member LLC?
1. Both a C corporation and a single-member LLC are taxed at the
corporate level at different tax rates.
2. A C corporation is subject to corporate income tax, while a
single-member LLC is regarded as a sole proprietorship for tax
purposes.
3. Both a C corporation and a single-member LLC are taxed at the
corporate level at a flat tax rate.
© 2025 All rights reserved
, 3
4. A C corporation is subject to corporate income tax, while a
single-member LLC is treated as a regular corporation for tax
purposes. Answer: 2. A C Corporation is subject to corporate
income tax, while a single member LLC is regarded as a sole
proprietorship for tax purposes.
Which business type is treated as a corporation for tax purposes?
1. Publicly traded partnership
2.Limited liability company with sole ownership
3. General partnership
4. Limited liability company with multiple owners Answer: 1. Publicly
Traded Partnership
A C Corp is considering issuing 10,000 additional shares of stock to
finance its expansion. The par value of one share is $1, and the
market value of one share is $35. The company is able to raise
capital of $350,000 for these shares.
What is the tax implication for the corporation raising capital via
additional shares?
1. The premium amount of $340,000 will be added to the
corporation's gross income.
© 2025 All rights reserved
D557 Corporate Taxation Pre-Assessment
Questions with Correct Answers | Updated
(100% Correct Answers)
An S Corporation forgoes it "S" status and becomes a "C"
Corporation.
What is the tax consequence of this change on the shareholders of
the corporation?
1. Its shareholders will no longer pay self-employment tax on their
allocated income.
2. Its shareholders will no longer pay any taxes on distributions
made by the corporation.
3. Its shareholders will no longer be eligible for deductions for
qualified business income.
4. Its shareholders will no longer be eligible for dividend received
deduction for any receipt of distribution. Answer: 3. Its shareholders
will no longer be eligible for deductions for qualified business
income.
A group of general partners operating a successful general
partnership business is considering forming a C Corporation.
© 2025 All rights reserved
,2
What tax consequence should be considered by owners of a general
partnership wanting to change to a C Corporation?
1. They will not pay self-employment taxes on their share of the
profits.
2. They will not have to pay separate entity-level income tax.
3. Their remunerations from the corporations will not be subject to
payroll taxes.
4. Their receipt of distributions from the corporation is not subject
to separate tax. Answer: 1. They will not pay self-employment taxes
on their share of the profits
What must a sole proprietor consider before converting their
business to either a C Corporation or a single member LLC?
1. Both a C corporation and a single-member LLC are taxed at the
corporate level at different tax rates.
2. A C corporation is subject to corporate income tax, while a
single-member LLC is regarded as a sole proprietorship for tax
purposes.
3. Both a C corporation and a single-member LLC are taxed at the
corporate level at a flat tax rate.
© 2025 All rights reserved
, 3
4. A C corporation is subject to corporate income tax, while a
single-member LLC is treated as a regular corporation for tax
purposes. Answer: 2. A C Corporation is subject to corporate
income tax, while a single member LLC is regarded as a sole
proprietorship for tax purposes.
Which business type is treated as a corporation for tax purposes?
1. Publicly traded partnership
2.Limited liability company with sole ownership
3. General partnership
4. Limited liability company with multiple owners Answer: 1. Publicly
Traded Partnership
A C Corp is considering issuing 10,000 additional shares of stock to
finance its expansion. The par value of one share is $1, and the
market value of one share is $35. The company is able to raise
capital of $350,000 for these shares.
What is the tax implication for the corporation raising capital via
additional shares?
1. The premium amount of $340,000 will be added to the
corporation's gross income.
© 2025 All rights reserved
