CHAPTER2-LECTURE1 - CHAPTER 2 CORPORATIONS INTRODUCTION...

CHAPTER 2
CORPORATIONS: INTRODUCTION, OPERATING
RULES, AND RELATED CORPORATIONS
I. VARIOUS BUSINESS FORMS
(1) SOLE PROPRIETORSHIP
(NOT SEPARATE TAXABLE ENTITY)
(FORM 1040 (SCHEDULE C))
(COVERED IN ACCOUNTING 4301)
(2) PARTNERSHIPS
(NOT TAXABLE ENTITY)
(FORM 1065 (AND SCHEDULE K-1))
(CHAPTERS 10 AND 11)
(3) TRUSTS AND ESTATES
(TAXABLE TO WHOM RECEIVES THE
INCOME (IE. ENTITY OR BENEFICIARY)
(FORM 1041 (AND SCHEDULE K-1))
(COVERED IN ACCOUNTING 4322)
(4) S CORPORATIONS
(TAXED (TREATED) SIMILAR TO
PARTNERSHIPS)
(FORM 1120S (AND SCHEDULE K-1))
(CHAPTER 12)

(5) REGULAR CORPORATIONS
(C CORPORATIONS)
(TAXABLE ENTITY; DIVIDENDS
DISTRIBUTED TO SHAREHOLDERS ARE
TAXABLE TO SHAREHOLDERS. THUS,
DOUBLE TAXATION )
(FORM 1120 (OR FORM 1120-A PRIOR TO
JANUARY 1, 2007))
(CHAPTERS 2 THROUGH 7)
II. WHAT IS A CORPORATION?
(STATE LAW DOES NOT GOVERN)
(1) DISREGARD OF CORPORATE ENTITY
(WHEN THERE IS A LACK OF SUBSTANCE
FOR THE CORPORATION OR THERE IS
LITTLE OR NO BUSINESS ACTIVITY)
(2) ASSIGNMENT OF INCOME DOCTRINE
(CANNOT ASSIGN INCOME EARNED FOR
SERVICE RENDERED TO SOMEONE ELSE
(OR SOME OTHER ENTITY))
(3) ASSOCIATIONS
(TAXED AS C (REGULAR) CORPORATION)

SIX CORPORATE CHARACTERISTICS
(1) ASSOCIATES
(2) OBJECTIVE TO CARRY ON
BUSINESS AND DIVIDE GAINS
THEREFROM
(3) CONTINUITY OF LIFE
(4) CENTRALIZED MANAGEMENT
(5) LIMITED LIABILITY
(6)