Chapter+12+_Business+Entities_ - Chapter 12 Business Entities Overview Selecting a Business Entity What Entity Form Is Best for a New Business General

Chapter+12+_Business+Entities_ - Chapter 12 Business...

This preview shows page 1 - 9 out of 31 pages.

Chapter 12 Business Entities Overview
Selecting a Business Entity
What Entity Form Is Best for a New Business? Chapter 16, Exhibit 1
Various Business Forms square6 Business operations can be conducted in a number of different forms including rhombus6 Sole proprietorships rhombus6 Partnerships rhombus6 Trusts and estates rhombus6 S corporations rhombus6 Regular corporations (also called C corporations)
Sole Proprietorship square6 Not a separate taxable entity square6 Income reported on owner’s Sch. C
Partnership square6 Separate entity, but does not pay tax rhombus6 Files information return (Form 1065) square6 Partnership ordinary business income (loss) and separately reported items are allocated to partners according to their profit and loss sharing ratios rhombus6 Each partner receives a Schedule K–1 pentastar2 Reports partner’s share of partnership ordinary business income (loss) and separately stated items rhombus6 Each partner reports these items on his or her own tax return
S Corporation square6 Separate entity, only pays special taxes (e.g., built-in gains) rhombus6 Files information return Form 1120S square6 Similar to partnership taxation rhombus6 Ordinary business income (loss) flows through to the shareholders to be reported on their separate returns Certain items flow through to the shareholders and retain their rhombus6 separate character when reported on the shareholders’ returns. square6 The S corporation ordinary business income (loss) and the separately reported items are allocated to the shareholders according to their stock ownership interests square6 May not have no more than 100 shareholders (non-resident aliens not allowed). square6 May only issue one class of stock

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture