Becca and Bob own a car rental business. Becca contributes 75 percent of the capital but does only 20 percent of the work, while Bob contributes 25 percent of the capital but does 80 percent of the work. Both decide on a 50/50 allocation of profits In which types of business structures would this arrangement be possible?
A) limited liabilities and partnerships
B) S corporations and partnerships
C) sole proprietorships and limited liabilities
D) S corporations and sole proprietorships
E) S corporations, limited liabilities, and partnerships
A
Explanation: A) LLC's and partnerships may allocate profits in whatever manner best suits the owners. However, S corporations must allocate profits in direct proportion to shareholder's interest. Sole proprietorships are owned by single individuals.
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