Quiz Understanding the Financial Planning Certification Exam Part 4 Lesson 4
Question 1: What is the most basic default business entity?
A. Limited Liability Company (LLC)
B. General Partnership
C. Corporation
D. Sole Proprietorship
Question 2: What is a disadvantage of a sole proprietorship?
A. Limited liability
B. Continuity of life
C. Unlimited liability
D. Separate taxation
Question 3: In a general partnership, who is liable for the partnership’s actions?
A. Limited partners
B. None of the partners
C. Only the active partners
D. All partners
Question 4: Which of the following is an advantage of limited liability companies (LLCs)?
A. Unlimited liability
B. Conduit income taxation
C. Complex formalities
D. Limited access to pension plans
Question 5: What distinguishes limited liability partnerships (LLPs) from general partnerships?
A. Unlimited liability for all partners
B. Limited liability for all partners
C. Limited liability for some partners
D. No liability for any partners
Question 6: What is the flat tax rate for C corporations after the Tax Cuts and Jobs Act?
A. 15%
B. 25%
C. 30%
D. 21%
Question 7: What form do S corporations file their taxes on?
A. Form 1040
B. Form 1065
C. Form 1120S
D. Form 1120
Question 8: Which entity allows for flow-through taxation like partnerships but maintains limited liability like corporations?
A. Limited partnership
B. S Corporation
C. C Corporation
D. Sole Proprietorship
Question 9: Personal Service Corporations (PSCs) are taxed at what flat rate?
A. 10%
B. 20%
C. 25%
D. 30%
Question 10: What is the maximum number of shareholders allowed for an S Corporation?
A. 50
B. 75
C. 100
D. 150
Question 11: What is the tax treatment of S Corporations?
A. Double taxation
B. Flow-through taxation
C. Flat tax rate
D. Progressive tax rate
Question 12: What is the eligibility requirement for shareholders of S Corporations?
A. Must be foreign nationals
B. Must be U.S. citizens or permanent resident aliens
C. Must be corporations
D. Must be at least 21 years old
Question 13: What is the primary advantage of an S Corporation?
A. Limited liability
B. Unlimited liability
C. Double taxation
D. No formalities required
Question 14: In a limited partnership, who is liable for the debts and obligations of the partnership?
A. General partners
B. Limited partners
C. Both general and limited partners
D. None of the partners
Question 15: What type of income or loss is limited in S Corporations?
A. Capital losses
B. Ordinary losses
C. Passive losses
D. Active losses
Question 16: What type of deductions were eliminated for entertainment-related expenses by the Tax Cuts and Jobs Act?
A. Business-related expenses
B. Personal expenses
C. Educational expenses
D. Recreational expenses
Question 17: What is the main disadvantage of C Corporations?
A. Limited liability
B. Flow-through taxation
C. Complex formalities
D. Double taxation
Question 18: Which entity type is characterized by unlimited personal liability?
A. Limited Liability Company (LLC)
B. Limited Partnership
C. Corporation
D. S Corporation
Question 19: What type of corporation allows for a dividend received deduction?
A. C Corporation
B. S Corporation
C. Personal Service Corporation
D. Limited Liability Company
Question 20: What is the maximum exclusion percentage for dividends received by a corporation?
A. 50%
B. 65%
C. 75%
D. 100%
Answer Key:
Answer Key:
1 D
2 C
3 D
4 B
5 C
6 D
7 C
8 B
9 B
10 C
11 B
12 B
13 A
14 B
15 B
16 D
17 D
18 B
19 A
20 D
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