Tax aspects of entity choices Flashcards
Key taxes
Buiness income, employee payroll tax & fica
business income tax
fed state
employee payroll tax ad fica
ss/medicare
other taxes
C. Individual Income Tax
D. Self-Employment tax
E. Long Term corporate dividend
F. Capital Gains
different tax treatemeents.
two regimes for corps
two regimes for coprs
IRC subchapter C, subchapter S
subchapter C
a. Generally applicable tax provisions for corps
b. This is where all corps start
SUBCHAPTER s
a. Special rules for certain small corps
b. Created for small bus to get limited liability without having to get double taxed
SPECIAL rules for subchapter S
F. Domestic corps only
G. Max of 100 shareholders
H. Only “eligible” shareholders allowed
I. Only 1 class of stock
J. Individuals, descendent estates, certain trusts
a. No corps, PSHIPS, multimember LLCs or non registered ___
C coprs:
rare to advise,
LLPS treatement
- General Pship formed same way
a. Writen pship agreement and filed with the state - Mostly for existing corps
- Occasionally the right choice in special situations.
LLC treatement
- Members—managers—LLC
2. Advantages:
avoiding uncecesarry tax is
important to business
choice of entity can have
important tax consequences
corps raise the risk of double
tax
most LLC, LLPS ad lps
minimize tax burder and are easier on compliance
Supchapter S corps offer
some advantages in particular istuaitons, but use requires care and expertise
never use,.
PSHIPS
