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Corp Income Tax I Outline 2006

Corp Income Tax I Outline 2006 - Corporate Tax I Fall 2006...

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Corporate Tax I Fall 2006 Class 1 : Introduction - Formation of a Corporation a. § 7701(a)(1) - Person . --The term "person" shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation. b. § 7701(a)(2) Partnership and partner . --The term "partnership" includes a syndicate, group, pool, joint venture, or other unincorporated organization, through or by means of which any business, financial operation, or venture is carried on, and which is not, within the meaning of this title, a trust or estate or a corporation; and the term "partner" includes a member in such a syndicate, group, pool, joint venture, or organization. c. § 7701(a)(3) Corporation . --The term "corporation" includes associations, joint-stock companies, and insurance companies. Types of Corporations d. C Corporation: Normal Corporation 1. Taxed like an individual 2. Has income and deductions 3. Corp pays tax on income 4. Shareholders taxed on dividends (15%) 5. Double tax regime b/c Corp taxed on income and shareholder is taxed on dividends. 6. All publicly traded company’s are C-Corps. e. S Corporation: Smaller Corporation 1. Less than 100 shareholders 2. Corporation is not taxed 3. Individual shareholder is taxed on their share of the Corp. (Single pass thru tax regime) ** Review Code & Regs in handout Realized Gain : is the increase in the t/p’s economic position as a result of a sale or exchange, i.e., the difference between the total consideration received (e.g., cash and any other property) for property and the property’s adjusted basis. Recognized Gain : is the portion of the realized gain which is taxable. Realized gain is not taxable until it is recognized. Gain is usually, but not always, recognized in the year in which it is realized. 1001(a) provides that gain or loss recognized to a taxpayer in connection with the sale or disposition of property is measured by the difference between the amount realized and the adjusted basis of the property. §1001(b) defines the amount realized from the sale or other disposition of property as the sum of any money received plus the fair market value of other property received.
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Class 2 : Requirements of § 351 Nonrecognition TRANSFERS TO CORPORATION: Transferring Property into Corp in Exchange for Shares. a. §351(a) Nonrecognition for Shareholder : No gain or loss shall be recognized if property is transferred to a corporation by one or more persons solely in exchange for stock in such corporation and immediately after the exchange such person or persons are in control of the corporation . 3 Major Requirements : (1) One or more persons (including individuals, corporations, partnerships, and other entities) must transfer “property” to the corporation. The term property includes: - A lease [Rev. Rul. 55-540]. - A perpetual nonexclusive license to use certain patents [E.I. duPont de Nemours v. U.S., 471 F.2d 1211 (Ct. Cl. 1973]; patents, copyrights, trademarks and trade secrets is property.
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