Question

Compare and contrast the tax rules and treatment applicable to those three forms of organization and the major way in which the tax treatment affects the shareholders or partners.

Explain at least two reasons why a business owner might opt for one form of organization over another. Provide support for your rationale.

Identify two sources of tax guidance (e.g. IRS code, Revenue Procedure) for each form of organization and how it defines a component of the tax policy for that form of organization.

Research an organization by identifying its entity type (corporation, s-corporation, or partnership) and describe how that organization’s tax methods are detailed in their financial reports any company of your choice.

Answer 1

1 Compare and contrast the tax rules and treatment applicable to those three forms of organization and the major way in which the tax treatment affects the shareholders or partners

Partnership Tax Rules

A partnership is a business structure where ownership and management responsibility of a company is split between two or more individuals. A partnership is not a legal entity that is separate from the owners and therefore the partnership itself does not pay taxes.

Corporation Tax Rules

A corporation is a business that is owned by a group of shareholders who purchase stock in the company. A corporation is a legal entity that is separate from the owners for tax purposes

2 Reasons when a business owner might opt for one form of organization over another.

because Setting out on your own can be the scariest decision you ever make, but, if done correctly, it could turn out to be the best. Contrary to much public opinion, now is a good time to start a business. A downturn should be seen as a test: if you can get off the ground and succeed during one, it follows that you can go on to even greater things afterwards.

3 Sources of tax guidance

Federal tax laws, Taxation laws