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TAX 655 Milestone OneTAX 655 Milestone OneMichelle Sweeney, CMASouthern New Hampshire UniversityTAX 655 Federal Income Tax of CorpProfessor Maurice LaBrieFebruary 25, 2018
TAX 655 Milestone OneI.MemorandumA.Based on the information provided from the client, Bob Jones, my recommendation is for the client to organize his car dealership as a C corporation. A C corporation is recognized as a separate tax paying entity. The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends (Forming a Corporation, n.d.). Since the C corporation is a separate legal entity from the client, should any legal be taken against the corporation, the client’s personal assets would be protected. Also, the by structuring the business as a C corporation, the client would not be liable for any debts the corporation may incur.B.When forming a business, the owner must determine whether to use the cash basis method or the accrual method of accounting. The cash basis is a method where