CTP CTP Business Taxation & Entity Structures

Question 1

Which business entity type is subject to double taxation in the United States?

Accepted Answer

C Corporation

Answer

S Corporation

Answer

Partnership

Answer

LLC taxed as disregarded entity

Question 2

An S Corporation shareholder must meet which requirement to avoid paying self-employment tax on their share of business income?

Accepted Answer

The shareholder must be an active employee receiving reasonable compensation

Answer

The shareholder must own at least 50% of the corporation

Answer

The shareholder must materially participate for 500+ hours

Answer

The shareholder must be a U.S. citizen

Question 3

A partnership's basis in property contributed by a partner is generally equal to:

Accepted Answer

The contributing partner's adjusted basis in the property

Answer

The fair market value at the date of contribution

Answer

The original cost of the property

Answer

The lower of FMV or adjusted basis

Question 4

Which IRS form is used by a C Corporation to file its annual federal income tax return?

Accepted Answer

Form 1120

Answer

Form 1120-S

Answer

Form 1065

Answer

Form 1040

Question 5

Under the check-the-box regulations, a single-member LLC is treated as which entity by default for federal tax purposes?

Accepted Answer

Disregarded entity (sole proprietorship)

Answer

C Corporation

Answer

S Corporation

Answer

Partnership

Question 6

Which of the following best describes the accumulated earnings tax?

Accepted Answer

A tax imposed on C Corporations that retain earnings beyond reasonable business needs to avoid dividend taxation

Answer

A tax on S Corporation distributions exceeding shareholder basis

Answer

A penalty for late payment of corporate estimated taxes

Answer

A tax on unreported foreign earnings held abroad