Multiple Choice
Which of the following is a disadvantage of S corporations?
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12. Stockholders' Equity
Characteristics of a Corporation
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Which of the following is the most common type of corporation?
A
Nonprofit Corporation
B
S Corporation
C
C Corporation
D
Professional Corporation
Verified step by step guidance1
Understand the types of corporations listed in the problem: Nonprofit Corporation, S Corporation, C Corporation, and Professional Corporation.
Learn the characteristics of each type: Nonprofit Corporations are designed for charitable purposes and do not distribute profits to owners; S Corporations are small businesses that avoid double taxation; C Corporations are standard corporations subject to corporate income tax; Professional Corporations are formed by professionals like doctors or lawyers.
Recognize that the most common type of corporation is the C Corporation, as it is the default structure for businesses and allows for unlimited shareholders, making it suitable for large companies.
Note that C Corporations are subject to double taxation, where profits are taxed at the corporate level and dividends are taxed at the shareholder level, but they offer benefits like limited liability and ease of raising capital.
Conclude that the correct answer is C Corporation based on its widespread use and suitability for various business needs.
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