2015 CCH Comp Topics Ch14_Part I - Chapter 14 Taxation of Corporations Basic Concepts Part I 2014 CCH Incorporated All Rights Reserved 4025 W Peterson

2015 CCH Comp Topics Ch14_Part I - Chapter 14 Taxation of...

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Chapter 14 Taxation of Corporations —Basic Concepts Part I ©2014 CCH Incorporated. All Rights Reserved. 4025 W. Peterson Ave. Chicago, IL 60646-6085 800 248 3248 CCHGroup.com
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CCH Federal Taxation Comprehensive Topics 2 of 53 Chapter 14 Exhibits Chapter 14, Exhibit Contents A 1. Entity Choices 2. Specific Entities 3. Comparative Advantages and Disadvantages 4. Definition of a Corporation 5. Definition of a Corporation: Check-the-Box-System 6. Use of Corporate Form 7. General Requirements 8. Transfers of Property 9. Code Sec. 351 – Example 1 10. Transfers for Stock 11. Control of the Corporation 12. Code Sec. 351 – Example 2 13. Control of the Corporation (Unusual Situations) 14. Code Sec. 351 – Example 3
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CCH Federal Taxation Comprehensive Topics 3 of 53 Chapter 14 Exhibits Chapter 14, Exhibit Contents B 15. Receipt of Boot 16. Code Sec. 351 – Example 4 17. Code Sec. 351 – Example 5 18. Transfers of Liabilities 19. Tax Avoidance or No Business Purpose 20. Liability in Excess of Basis 21. Recourse vs. Nonrecourse Debt 22. Shareholder’s Basis in Stock 23. Code Sec. 351 – Example 6 24. Code Sec. 351 – Example 7 25. Code Sec. 351 – Example 8 26. Shareholder’s Holding Period 27. Corporation’s Basis 28. Transfers of Property with Built-in Losses
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CCH Federal Taxation Comprehensive Topics 4 of 53 Chapter 14 Exhibits Chapter 14, Exhibit Contents C 29. Code Sec. 351 – Example 9 30. Corporation’s Holding Period 31. Depreciation Recapture 32. Code Sec. 351 – Example 10 33. Code Sec. 351 – Example 11 34. General Business Credit Recapture
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CCH Federal Taxation Comprehensive Topics 5 of 53 Entity Choices Many issues must be addressed when forming a business Major concern is type of entity Three major types: Sole proprietorships Partnerships Corporations Each entity has certain tax and nontax advantages and disadvantages Chapter 14, Exhibit 1
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CCH Federal Taxation Comprehensive Topics 6 of 53 Specific Entities Sole proprietorship - one person owns all assets and is fully responsible for all liabilities Partnership - two or more persons or entities own all assets and are responsible for all liabilities Corporation - legal entity created by authority of state law Separate and distinct from its owners (shareholders) C corporation - separate taxpaying entity S corporation - not a separate taxpaying entity Limited liability company (LLC) - all 50 states and District of Columbia recognize LLCs Has corporate and partnership characteristics Treated as conduit entity for tax purposes Limited liability partnership (LLP) is similar to LLC Organized under each state’s statutes Chapter 14, Exhibit 2
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CCH Federal Taxation Comprehensive Topics 7 of 53 Comparative Advantages and Disadvantages Advantage: Sole proprietorships, partnerships, and S corporations are conduits All income, gains, losses, credits, etc. pass through to their owners Retain their identity when they pass through Disadvantage: Sole proprietors and partners are not considered employees of their firm Shareholders employed by their corporation have employee status Restrictions on shareholders who also are employees of their S corporation Chapter 14, Exhibit 3a
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