Which of the following statements regarding alternative business forms is true?
A) If an S corporation's election terminates, the corporation is forced to liquidate.
B) Some states treat S corporations as taxable corporations for purposes of corporate franchise taxes.
C) Generally, the transfer of property to a new partnership in exchange for a partnership interest is a taxable event.
D) The owners of a new business should be indifferent between operating as an S corporation and a partnership.

Question

Quizplus · Accepted Answer

Some states do treat S corporations as taxable corporations for purposes of corporate franchise taxes. Option A is false because if an S corporation's election is terminated, it will become a C corporation rather than forced to liquidate. Option C is also false because the transfer of property to a partnership in exchange for a partnership interest is generally not a taxable event. Option D is subjective and depends on the specific circumstances of the business, so it cannot be generalized as true or false.

Which of the Following Statements Regarding Alternative Business Forms Is