Taxable Entities

Question 1

Taxable Entities

Answer 1

Whose income has income tax imposed on it:

1. Individuals
2. C-Corporations
3. Fiduciaries (Estates/Trusts)

Question 2

Flow-Through Entities

Answer 2

Whose income is passed through/allocated to their owners who bear responsibility for bay any tax due

Question 3

Individual Taxpayer

Answer 3

• Primary target for income tax
• Income taxed is paid 1) All income of a citizen/resident alien regardless of where earned AND 2) All income earned in the land. Source of income.

Citizens = Citizen (legally recognized)

Resident Aliens = must file tax return. Substantial presence test. Non-citizen & resident for extended period of time ∴ must file

Non-Resident Aliens = Non-citizen & non-resident, taxed on income from US sources

Worldwide Income = US Citizens taxed on foreign sources of income both abroad and at home ∴ they can claim either tax credit or deduct such taxes.

• World Wide Income Exclusion Rule If principal place of business (Physical Presence Test = 330/365 days = bona fide) is abroad they can exclude foreign earned income is < 99,200

Question 4

Corporate Taxpayers

Answer 4

Corporate Tax Payer = 1) [Citizen/Resident] Domestic Corporations AND 2) [Earned in Land] Corporations that operate a trade business in the USA

C-Corporation separate taxable entity, all are treated this way unless eligible/elect to be treated like an S-Corporation (which passes through to shareholders)

Question 5

Fiduciary Taxpayers

Answer 5

Fiduciary = trusted with property of a beneficiary