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Question 1
A private, for profit Corp. that 1) sells new appliances 2) has 5 shareholders 3) is subject to double taxation and 4) has made no IPO would be classified as
Correct
Incorrect!
Correct There are a couple of items in the selections above that give this company away as a close corporation. First, the fact that the company only has five shareholders means that it is closely held. Moreover, item 4 in the question says that the company has made no Initial Public Offering (IPO), therefore, the company's shares have not been sold to the public. There is no mention in the question of whether or not the company operates for profit or not, nor does it say that all shareholders are engaged in a professional practice as would be the case in a professional corporation. An S corporation is possible in this case, but the question would likely say that the company had made an S-Corp election (Chapter 2).
Incorrect! There are a couple of items in the selections above that give this company away as a close corporation. First, the fact that the company only has five shareholders means that it is closely held. Moreover, item 4 in the question says that the company has made no Initial Public Offering (IPO), therefore, the company's shares have not been sold to the public. There is no mention in the question of whether or not the company operates for profit or not, nor does it say that all shareholders are engaged in a professional practice as would be the case in a professional corporation. An S corporation is possible in this case, but the question would likely say that the company had made an S-Corp election (Chapter 2).
Correct
Incorrect!
Correct
Incorrect!
Question 2
What do you think about the following companies which ones are public?
Correct IBM is publicly traded on the NYSE. The Kabob King is a privately held company. The Yankees are also privately held. #4 is tricky. Law firms are not typically corporations. They are most often partnerships or professional companies and are never available for public exchange of their ownership interests.
Incorrect! IBM is publicly traded on the NYSE. The Kabob King is a privately held company. The Yankees are also privately held. #4 is tricky. Law firms are not typically corporations. They are most often partnerships or professional companies and are never available for public exchange of their ownership interests.
Correct
Incorrect!
Correct
Incorrect!
Correct
Incorrect!