4-2 Corporation Taxation Flashcards
Sole ProPrietorship
Sole proprietorships may not deduct compensation paid to owner-employee
partnership
partnership is a tax reporting, but not taxpaying, entity. Form 1065 send Schedule K-1, to partners
Partnership Loss
If a partnership reports a loss, the partner??s allocable share of the loss reduces that partner??s other income and provides tax savings based on the partner??s marginal tax rate.
Corporation Temp Difference
Interest income.rental , royalty rec in advance
Corporation Perm Difference
Municipal /state obligation/bonds AND Life insurance on the life of an officer Beneficiary is the company;Federal income taxes are not a deduction
Accural method required when
tax shelter,Certain farming corp,Acciounting for purchase and sale inventory; the business has greater than 5 m of average
annual gross receipts for the 3 year period ending with tax year with the tax year
Domestic production deduction
9% deduction LESSOR of QPAI and Taxable income (dis regard QPAI deduction)
Domestic production deduction limitation
Limitation: The deduction may not exceed 50 percent of the W-2 wages
Executive Compensation deduction limited to
1000000
Bonus accural
Pay by 4/15 ; No shareholder/ employee
Bad debt
Accural method : when AR write off , Cash method no deduction
Corporation Charitable contribution
Limited to 10% of AGTaxable income ( Gross income including Dividend - Deductions (Not including charity deductions; DRD; Domestic production deduction; NOL carry back ; capital loss carryback)
DRD deduction %
0-20% – 70% 20-80%— 80% 80%+ – 100%
DRD must meet time restriction
Must own 46 days ina 91 days period beginning on the date 45 days before the ex dividend date of the stock to qualify for the dividend recieed deduction
<p>Entity for DRD not apply</p>
<p>" 3 p " 1. Persona; service corp
2. personal holding companies
3, Personally taxed S corp</p>
