Chapter 17 Study Notes Flashcards
different business types
sole proprietorships partnerships Scorps Ccorps LLC
Sole proprietorships
income and gains are treated as if from the proprietor, reported on schedule C
Partnerships
Not subject tofederal income tax, most income and expense items are aggregated to get the firms net income, any income not aggregated is reported separately to the partners, examples are:
interest income
dividend income
long term capital gain
Ccorp
a regular corporation, subject to federal income tax, experiences double taxation
Scorp
don’t pay federal inc tax, income is passed through to the owners and separate items are reported separately as well
incremental tax cost
marginal tax - actual taxes paid
dividend distribution
are not deductible by a corporation, but are taxable to the shareholder
dividend tax rate to shareholder
15%
Corporation income tax rates
Taxable Income Tax Is: Over— But Not Over— Of the Amount Over— $ –0– $ 50,000 15% $ –0– 50,000 75,000 $ 7,500 + 25% 50,000 75,000 100,000 13,750 + 34% 75,000 100,000 335,000 22,250 + 39% 100,000 335,000 10,000,000 113,900 + 34% 335,000 10,000,000 15,000,000 3,400,000 + 35% 10,000,000 15,000,000 18,333,333 5,150,000 + 38% 15,000,000 18,333,333 — 35% —
Ccorp lossess
are deductible to the owner
Partnership losses
are passed through to the owners and can be deducted as active loss
Limited liability company
avoids unlimited liability and can be treated as a proprietorship or a partnership
corporation traits
continuity of life
centralized management
limited liability
free transferability of interest
check the box regulation
a box to check was added to determine your entity status
LLC pays
employment and excise tax
Personal Service corporations
must use a calendar year
Cash method is available for these corporations
Scorp
Corps engaged in the trade or business of farming or lumber
qualified PSC’s
Corps with average annual gross receipts of 5 million or less for the most recent three year period
Cash basis limit
1 million
Capital Gains and losses result from
the taxable sales or exchanges of capital assets
Capital Gains
taxed at 15% for individuals
taxed at the regular corporate rate for corporations
Personal capital losses are limited to
3000 a year against regular income and it is carried forward to future years
Capital Losses for corporations
Can only be used to offset capital losses and are carried back three years to the earliest time or five years later as a short term capital loss when it was a long term capital loss
pg 17-12
oh yeah
