1. The difficulty of selling one\'s investment in a publicly held corporation is
ID: 364067 • Letter: 1
Question
1. The difficulty of selling one's investment in a publicly held corporation is one of the major disadvantages of the corporate form.
True or False
2. "A partnership can be changed to a corporation later, when profits are assured. "
True or False
3. A limited liability partnership (LLP) pays income taxes.
True or False
4. The _____ form of business organization most limits personal liability for its shareholders
sole proprietorship
cooperative society
corporation
general partnership
sole proprietorship
cooperative society
corporation
general partnership
Explanation / Answer
1. False
It is not that difficult for the shareholders in the corporation to sell their shares as compared to privately held corporations. This certainly is not the major disadvantage of the corporations. Major disadvantage (prior to GST) was of double taxation.
2. False.
This is not necessary that a partnership to be profitable to change its business structure from partnership to a corporation. Conversion of partnership to a corporation depends on tax filings, carrying forward assets to the new business entity, etc.
3. False
Though LLP is a legal entity. it is considered as a partnership for the purposes of tax payments. hence, LLP does not pay income taxes just like partnerships. But, individual partners pay the taxes on their share of income earned.
4. Corporation
all the other options have unlimited liability.
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