CTC CTC Business Tax & Entity Structures

Question 1

Which entity type allows business owners to avoid self-employment tax on a portion of their income by splitting earnings into salary and distributions?

Accepted Answer

S corporation

Answer

Sole proprietorship

Answer

C corporation

Answer

General partnership

Question 2

A C corporation currently pays a flat federal income tax rate of:

Accepted Answer

21%

Answer

25%

Answer

28%

Answer

35%

Question 3

Which deduction allows self-employed individuals and pass-through entity owners to deduct up to 20% of qualified business income?

Accepted Answer

Qualified Business Income (QBI) deduction

Answer

Section 179 deduction

Answer

Home office deduction

Answer

Business start-up cost deduction

Question 4

When a business elects Section 179 expensing, it allows the owner to:

Accepted Answer

Immediately deduct the full cost of qualifying business property

Answer

Defer income to future years

Answer

Spread depreciation over 39 years

Answer

Exclude gains from asset sales

Question 5

For a Certified Tax Coach, which entity conversion strategy may trigger built-in gains tax?

Accepted Answer

Converting a C corporation to an S corporation

Answer

Converting a sole proprietorship to an LLC

Answer

Converting a partnership to an LLC

Answer

Converting an S corporation to a sole proprietorship

Question 6

A qualified opportunity zone investment primarily provides which tax benefit?

Accepted Answer

Deferral and potential exclusion of capital gains

Answer

Immediate deduction of the invested amount

Answer

Conversion of ordinary income to capital gains

Answer

Elimination of self-employment tax