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Chapter 15 - Entities Overview Chapter 15 Entities Overview True / False Questions 1. Corporations are legally formed by filing articles of organization with the state in which the corporation will be created. True False 2. General partnerships are legally formed by filing a partnership agreement with the state in which the partnership will be formed. True False 3. Limited partnerships are legally formed by filing a certificate of limited partnership with the state in which the partnership will be organized. True False 4. Sole proprietorships are not treated as legal entities separate from their individual owners. True False 5. S corporation shareholders are legally responsible for paying the S corporation's debts because it is treated as a flow-through entity for tax purposes. True False 6. LLC members have more flexibility than shareholders to alter their legal arrangements with respect to one another, the entity, and with outsiders. True False 15-1 Chapter 15 - Entities Overview 7. Corporations are legally better suited for taking a business public compared with LLCs and general partnerships. True False 8. Both tax and nontax objectives should be considered when choosing an appropriate business entity. True False 9. Tax rules require that entities be classified the same way for tax purposes as they are classified for legal purposes. True False 10. C corporations and S corporations are separate taxpaying entities that pay tax on their own income. True False 11. All unincorporated entities are generally treated as flow-through entities for tax purposes. True False 12. In certain circumstances, C corporations can elect to be treated as flow-through entities. True False 13. An unincorporated entity with more than one owner is, by default, taxed as a partnership. True False 14. A single-member LLC is taxed as a partnership. True False 15-2 Chapter 15 - Entities Overview 15. For tax purposes, a disregarded entity is an unincorporated entity with only one individual owner. True False 16. Unincorporated entities with only one individual owner are taxed as sole proprietorships. True False 17. S corporations have more restrictive ownership requirements than other entities. True False 18. Entities taxed as partnerships use special allocations to reward owners based on their responsibilities, contributions, and individual needs. True False 19. Sole proprietorships are subject to self-employment taxes on net income from their sole proprietorships. True False 20. Shareholders of C corporations receiving property distributions must recognize dividend income equal to the fair market value of the distributed property if the distributing corporation has sufficient earnings and profits. ... View Full Document

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