Which of the following statements is true of corporations?

Question

Quizplus · Accepted Answer

Corporations have distinct tax treatment compared to other entities. Specifically, when a corporation carries back a long-term capital loss, it is treated as a short-term capital loss for tax purposes. This is important because short-term capital losses can offset short-term capital gains, which are taxed at a higher rate than long-term capital gains. Other statements do not accurately describe the tax treatment of corporations. For example, corporate income is taxed differently than partnership income, the charitable contribution deduction limit is not a fixed percentage for all corporations, capital losses have specific treatment under corporate tax law, and organizational expenditures must be capitalized and amortized over a period of years, not deducted immediately.

Which of the Following Statements Is True of Corporations