Question

Susan and Martin are siblings starting a closely-held family business with less than 100 relatives who will be shareholders. They anticipate not needing to raise venture capital, will not provide equity incentives to employees, expect the business to be profitable and plan to distribute substantially all of its profits to the shareholders. The company will issue only one class of stock. The most suitable form of entity is a:a. C corporation
b. S corporation
c. General Partnership
d. Limited Liability Company

Answer 1

Answer: (B) S Corporation  

 

Explanation:

The S corporation is basically stand for the small business corporation that helps in conduct the valid election for the purpose of deduction, corporate income and the crediting process based on the shareholder.

The S corporation is basically providing the various types of benefits as follows:

• Providing the limited liabilities
• Provide protection to the personal assets  
• Easily termination
• Asset Withdraws

 According to the given scenario, the S corporation is one of the most suitable form of entity that helps in managing the class stock and also distribution of the given profits to all the shareholders in an organization.  

 Therefore, Option (B) is correct answer.