Which of the following statements generally cannot be correct for an investor who faces unlimited liability on an investment?

Question

Quizplus · Accepted Answer

An investor who faces unlimited liability on an investment typically has a sole proprietorship or a partnership in which they are personally responsible for all of the firm's debts and obligations. As such, they are not likely to own stock in the firm or be responsible for managing it (option A and D respectively). However, they may have partners (option B). Double taxation (option C) generally does not apply to sole proprietorships or partnerships because profits and losses are considered the personal income of the owner(s). Double taxation is typically only an issue for corporations, where profits are taxed at the corporate level and then again at the individual level when they are distributed to shareholders.

Which of the Following Statements Generally Cannot Be Correct for an Investor