9. When Patricia sells her General Motors common stock at the same time that Brian purchases the same amount of General Motor's stock, General Motors receives:
A. The spread between the bid and ask of the transaction
B. The dollar amount of the transaction, less brokerage fees
C. Only the par value of the common stock
D. ANSWER Nothing
I think General Motors gets nothing because no new stock was created/issued and the stock was sold and bought for the same price.
11. With a Subchapter S corporation
A. ANSWER Corporate income is taxed as direct income to stockholders
B. Stockholders have the same liability as members of a partnership
C. The number of stockholders is unlimited
D. Life of the corporation is limited
an S corporation is similiar to a C corporation except for the double taxation and public/private .....and S corporation has less then 75 stockholders. The S corporation is taxed once on individual income tax....C corporation is taxed twice....once as a corporation and again on individual income tax
Please see preceding post (your first one)
Incomplete post.
You are correct in your answer for question 9. When Patricia sells her General Motors common stock at the same time that Brian purchases the same amount of General Motor's stock, General Motors does not receive any funds because the stock was just transferred between two individuals, with no new stock being created or issued.
For question 11, the correct answer is:
A. Corporate income is taxed as direct income to stockholders
In a Subchapter S corporation, also known as an S corporation, the corporate income is passed through to the stockholders and is taxed as individual income. This is different from a C corporation where corporate income is taxed at the corporate level and then again when distributed to shareholders as dividends. The liability of stockholders in an S corporation is limited to their investment in the company. The number of stockholders in an S corporation is limited to 100 shareholders or less. The life of the corporation is not limited and it can continue to exist unless it is dissolved or terminated according to applicable laws and regulations.
9. The correct answer is B. The dollar amount of the transaction, less brokerage fees. When Patricia sells her General Motors stock and Brian purchases the same amount, General Motors receives the actual dollar amount of the transaction. This is because buying and selling stock involves a transfer of ownership rights, and General Motors benefits from the transaction by receiving payment for the shares being sold.
To arrive at this answer, you can eliminate options A, C, and D by understanding how stock transactions work. General Motors does not receive the spread between the bid and ask (option A), which refers to the difference between the highest price a buyer is willing to pay and the lowest price a seller is willing to accept. General Motors also does not receive only the par value of the stock (option C) because the par value is a nominal value assigned to a share of stock and does not represent the actual market value. Finally, General Motors does not receive nothing (option D) because, as mentioned earlier, they do receive the dollar amount of the transaction.
11. The correct answer is A. Corporate income is taxed as direct income to stockholders. In a Subchapter S corporation, also known as an S corporation, the corporate income is not subject to corporate-level tax. Instead, the income is "passed through" to the stockholders and taxed at their individual tax rates. This means that the income is directly added to the stockholders' personal income and taxed accordingly.
To arrive at this answer, you can eliminate options B, C, and D by understanding the characteristics of a Subchapter S corporation. Although stockholders do have limited liability (like in a traditional corporation) but unlike members of a partnership (option B), this is not the defining feature of an S corporation. The number of stockholders in an S corporation is limited to a maximum of 100 (option C), which is not unlimited. Finally, the life of an S corporation is not limited (option D), as it can exist indefinitely unless specified otherwise. The main distinction for an S corporation is the pass-through taxation on corporate income.