The most common forms of business are the sole proprietorship, partnership, and corporation. When beginning a business, you must decide which form of business to use. You must consider the legal and tax considerations when deciding which form of business to use.

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Answer the following questions as accurate as possible. Please pay attention to your answers as they will appear again on the "Quiz Online" part of this topic. Prepare your answers for these questions and then click on "Assignment" online in step 3 above when you are ready to submit them.

1. Generally, a partnership does not pay tax on its income. What does this mean?

2. What is an entity formed under state law by filing articles of organization where none of the members are personally liable for its debts? How does it work?

3. What are Family Partnerships? What are the requirements for family members to be recognized as partners?

4. What is a capital interest in a partnership? When is the capital interest distributed to the owners?

5. What is an organization formed after 1996 is classified as a partnership for federal tax purposes?

6. What requirements must a qualified entity meet to be considered a business entity?

7. What can be said of a corporation that receives a below-market loan and uses the proceeds for its trade or business? Can the corporation deduct any expenses of a below-market loan.

8. Can a corporation deduct charitable contributions? What are the limitations on the deduction? How do you figure taxable income for this purpose?

9. How does a corporation figure an NOL? When does a corporation incur an NOL? Which rule applies in figuring an NOL?

10. When can a corporation deduct capital losses? What happens when a corporation carries a capital loss from one year to another?

11. What forms must a corporation use to report its income, gain, losses, deductions, credits, and to figure its income tax liability? What purposes do each form carry?

12. When is a corporation treated as a small corporation exempt from the AMT for its current tax year?

13. What is the simplest form of business organization to start and maintain? Why?

14. What is a partnership? How does it work? How many partners must a partnership have to be considered a partnership?

15. What is a corporation? What similarities does it have with a sole proprietorship? When are a corporation taxed?

16. What are the benefits of organizing your business as an S Corporation?

17. How does a limited liability company work? How is it different from a corporation?

18. When are you required to get a taxpayer identification number? What are the kinds of taxpayer identification numbers?

19. How many members are required to form an LLC?