Question

xin and shawn will enjoy several structural benefits with their latest corporate venture. what drawback might they face in starting and running their organization as a c corporation?

a) not get tax breaks

b) unlimited financial liability

c) double taxation

d) limited financial resources

e) find it difficult to get bank financing due to the business’ structure

Explanation:

To solve this, we analyze each option based on C - corporation characteristics:

• Option A: C - corporations can get tax breaks in some cases, so this is incorrect.
• Option B: C - corporations have limited liability, not unlimited, so this is wrong.
• Option C: A major drawback of C - corporations is double taxation (the corporation is taxed on its income, and shareholders are taxed on dividends).
• Option D: C - corporations can raise capital through stocks, so limited financial resources are not a typical drawback.
• Option E: C - corporations are often more likely to get bank financing due to their structure, so this is incorrect.

Answer:

C) double taxation