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24 August, 14:04

Two of your friends are horse fanatics. They inherited several acres of land that they turned into a retirement sanctuary for racehorses. Serenity Stables was originally incorporated as a limited liability company. The members are reevaluating this form of ownership. Unlike an S corporation, they now pay self-employment taxes on all company profits-not just on the salaries they pay themselves. True or False?

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  1. 24 August, 15:24
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    True

    Explanation:

    An S corporation is one that provides a limited liability to the owners. Their personal prooery are shielded from creditors of the business entity.

    Taxes for self employment in this instance is paid only on earnings that are wages. There are no self employment taxes on the business's profits.

    So in this scenario if your friends pay self employment taxes on company profits, then it is different from an S corporation.

    The statement is therefore true
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