LAW 3220 CLEMSON EXAM 3
EXAMINATION SCRIPT 2026 COMPLETE
QUESTIONS WITH ACCURATE ANSWERS
◉ advantages of C corps.
Answer: - shareholders are not personally liable for business debts
and liabilities
- corporation is eligible for greater tax deductions that other types of
entities
- can raise capital through the issuance of more stock
◉ disadvantages of C corps.
Answer: - double taxation at both corporate and shareholder level
- expensive setup (file articles of incorporation), very formal annual
maintenance requirements
- owners can't personally deduct business losses
◉ S Corporations.
Answer: separate legal entity from its owners that is treated as a
pass through entity
◉ advantages of an S Corp.
, Answer: - shareholders have no personal liability for business debts
and liabilities
- no double taxation - taxes are only due at the shareholder level on S
Corp's earnings
◉ disadvantages of an S corp.
Answer: - pricey startup fees (file articles of incorporation), must
maintain corporate formalities
- restrictions (no more than 100 shareholders, no foreign
shareholders, all shareholders must be individuals)
◉ limited liability company.
Answer: treated like a corporation for liability purposes, but like a
partnership for tax purposes
◉ formation of an LLC.
Answer: files articles of incorporation with the state
◉ advantages of an LLC.
Answer: - any number of owners allowed
- members can be individuals, corporations, partnerships, or other
LLCs
EXAMINATION SCRIPT 2026 COMPLETE
QUESTIONS WITH ACCURATE ANSWERS
◉ advantages of C corps.
Answer: - shareholders are not personally liable for business debts
and liabilities
- corporation is eligible for greater tax deductions that other types of
entities
- can raise capital through the issuance of more stock
◉ disadvantages of C corps.
Answer: - double taxation at both corporate and shareholder level
- expensive setup (file articles of incorporation), very formal annual
maintenance requirements
- owners can't personally deduct business losses
◉ S Corporations.
Answer: separate legal entity from its owners that is treated as a
pass through entity
◉ advantages of an S Corp.
, Answer: - shareholders have no personal liability for business debts
and liabilities
- no double taxation - taxes are only due at the shareholder level on S
Corp's earnings
◉ disadvantages of an S corp.
Answer: - pricey startup fees (file articles of incorporation), must
maintain corporate formalities
- restrictions (no more than 100 shareholders, no foreign
shareholders, all shareholders must be individuals)
◉ limited liability company.
Answer: treated like a corporation for liability purposes, but like a
partnership for tax purposes
◉ formation of an LLC.
Answer: files articles of incorporation with the state
◉ advantages of an LLC.
Answer: - any number of owners allowed
- members can be individuals, corporations, partnerships, or other
LLCs
