Ask Question
BusinessBusiness
26 August, 15:27

Although it is a small company, Zorn Enterprises owns a large number of inexpensive rental housing units in Texas and Louisiana. Currently, the company is a chartered C corporation, but the owners are interested in switching to be an S corporation. After consulting a lawyer, they learned that Zorn Enterprises does not qualify to be designated as an S corporation. Which of the following characteristics of Zorn Enterprises would prevent it from becoming an S corporation? A. The firm has fewer than 75 stockholders. B. The firm is chartered in one state, but owns property in another. C. The firm has only one class of stock, all owned by U. S. citizens. D. The firm receives more than 70 percent of its income from rents and other passive sources.

+2
Answers (1)
  1. 26 August, 15:32
    0
    D) The firm receives more than 70 percent of its income from rents and other passive sources.

    Explanation:

    Many small corporations change from C corporations to S corporations since S corporations eliminate the double taxation issues. Although S corporations have some limitations specially regarding the number of stock owners (currently limited to 100) and their nationality or legal residence status. They can only issue one type of stock which limits their ability to increase capital. S corporations cannot have more than 70 percent of their income from passive sources (this includes rent).
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Although it is a small company, Zorn Enterprises owns a large number of inexpensive rental housing units in Texas and Louisiana. Currently, ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Why might soviet economic planners have favored heavy industry over the makers of consumer goods? the products of heavy industry provided material for many other industries. the products of heavy industry brought in more money.
Answers (1)
Mr. Jenkins is interested in enrolling in a Medicare cost plan and has sought your advice. What would you tell him?
Answers (1)
In addition to the new designer, Burberry also stepped up its involvement in social media, relationships with style magazines and connecting with high-profile trendsetters. This is an example of which concept?
Answers (1)
Suppose the following information: The cost of a full-page color ad in the U. S. national edition of The Wall Street Journal (newspaper) is $327,897 and its U. S. audience size is 1,566,027. The cost of a full-page color ad in the U. S.
Answers (1)
The amount of federal income tax withheld from employee pay depends on the employee's income and the number of withholding allowances claimed by the employee.
Answers (1)
New Questions in Business
Coronado Shoes Fool Inc. is involved in litigation regarding a faulty product sold in a prior year. The company has consulted with its attorney and determined that it is possible that they may lose the case.
Answers (1)
Suppose during 2014 that Federal Express reported the following information (in millions) : net sales of $35,497 and net income of $98.
Answers (2)
During a certain four-year period, the consumer price index (CPI) increased by 30%, but during the next four-year period, it increased by only 10%. Which of these conditions must have existed during the second four-year period? A. Deflation B.
Answers (2)
Flagstaff Company has budgeted production units of 7,900 for July and 8,100 for August. The direct materials requirement per unit is 2 ounces (oz.).
Answers (1)
Name and describe the four basic types of fees and cost a franchise owner must pay
Answers (1)
Home » Business » Although it is a small company, Zorn Enterprises owns a large number of inexpensive rental housing units in Texas and Louisiana. Currently, the company is a chartered C corporation, but the owners are interested in switching to be an S corporation.
Sign Up Forgot Password?