1. Partnerships must file an annual informational income tax return. Why isn't any income tax payment due with this return?
A. Because the partnership entity pays income tax in installments
B. Because the Senate doesn't require it
C. Because partnerships don't pay income tax. All the partnership income is reported on the personal tax returns of the partners.
D. Because the House of Representatives doesn't require it
2. You're a paralegal at a law firm. You learn through work that one of the firm's corporate clients is going to declare a stock split that will likely increase the value of their stock. You mention this to your spouse. He or she promptly goes out and buys the stock.
A. Your spouse has probably committed "outsider trading."
B. There's no problem because you weren't working for this corporate client personally.
C. There's no problem because the information wasn't divulged to a business competitor of your firm's client.
D. You've violated the ethical rules on client matter confidentiality.
3. Businesses in which the owners' personal assets aren't generally at risk include
A. corporations.
B. general partnerships.
C. general partnership and sole proprietorships.
D. franchises.
4. Buy-sell provisions in shareholder agreements may be activated when the stockholder
A. sells his or her house.
B. files for bankruptcy.
C. gets another job.
D. has an illness.