Certified Apartment Portfolio Supervisor (CAPS) Practice Exam - Module 2

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Prepare for the Certified Apartment Portfolio Supervisor (CAPS) Exam with a focused quiz based on Module 2. Enhance your learning with multiple choice questions designed to reinforce your understanding of the CAPS material and boost your confidence for the test.

Practice this question and more.

What is a defining characteristic of an S Corporation?

Unlimited shareholders
Taxed like a corporation
Max 100 shareholders
Easy to set up and maintain

The correct answer is: Max 100 shareholders

An S Corporation, or S Corp, is characterized by a critical limitation on the number of shareholders it can have, specifically a maximum of 100 shareholders. This feature is designed to differentiate S Corporations from traditional C Corporations, which can have an unlimited number of shareholders. The limitation helps maintain the S Corp's status as a smaller, closely-held corporate structure, which can have specific operational advantages, especially in terms of taxation and regulatory requirements. The restriction on the number of shareholders serves to ensure that S Corporations remain manageable and subject to different taxation rules that can benefit smaller businesses. Additionally, an S Corp allows profits (and losses) to pass through directly to the owners' personal income without being subject to corporate tax rates, a tax treatment that emphasizes the need for a defined and limited structure in terms of ownership. This structure is particularly appealing for small businesses that wish to avoid the double taxation typically associated with C Corporations while enjoying some corporate benefits.