12 May 2018BackgroundMr. Bob Jones owns a successfully used car business in Florida; he is currently operating the business as a sole proprietor. However, Jones is considering changing the business entity to have his daughter Mandy be an owner of the business in either the partnership, S corporation or aC corporation structure. If Mandy is brought in as an owner, she would be a manager with a possibility of 40 percent interest. Currently, the business is valued at $53,000,000, with a growth of 10 percent over the next several years. The land and building of the business are worth 2,000,000 and $400,000 respectively for tax basis. The inventory values are 12,000,000 that has a cost basis of 5,000,000.The office furniture and equipment are fully depreciated but still have value in the business worth. Jones had a $1,200,000 in taxable income last years with the business and the personal investments of land, stock, and bonds. Business EntityCurrently, the business is a sole proprietor if anything would happen to Jones, the business would close. For Jones’ business, an S-corporation would work the best for the current environment of the business. When converting the business to a different entity, there are areas tolook at such as tax consequences from the conversion, the legal liability, the recordkeeping and benefits of switching to a different entity. For the business to switch to an S-corporation “at a minimum, Articles of Incorporation or Organization will have to be filed with the appropriate state authorities. Corporations must also establish Bylaws and conduct a formal meeting of shareholders”[How181]. The S-corporation would allow Jones to keep the entity as a small business and increase the lifetime of the business.