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BUSI603 CaseStudy8

BUSI603 CaseStudy8 - 1 Running head CASE STUDY EIGHT Case...

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Running head: CASE STUDY EIGHT Case Study Eight Jeremy Dudley Liberty University 1
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Case Study Eight The simple corporation is a legal entity, “an artificial being, invisible, intangible, and existing only in contemplation of the law” (Longenecker, Moore, Petty, & Palich, 2008, p.170). The corporation is liable for all debts and consequences related to the business, not its owners. This differs from sole proprietorship and other simple partnerships as the owners of the business have a specific invested interest in the company and are held personally liable for any and all business dealings, debts, and consequences. Flexibility and complete control are some advantages for owners, but full personal responsibility and vulnerability of personal assets are some disadvantages that owners will face. Subchapter S corporations, which gets its name from the Subchapter S of the Internal Revenue Code, allows a business to maintain limited liability status like a simple corporation but gives the corporation the tax status of a partnership (Longenecker, Moore, Petty, & Palich, 2008). However there are some conditions that must be met in order to achieve subchapter S status. The corporation must not have more than 75 stockholders, the stockholders must be individuals, only one class of stock can be outstanding, the corporation must operate on a calendar year fiscally, and there can be no nonresident stockholders (Longenecker, Moore, Petty, & Palich, 2008). The tax status
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BUSI603 CaseStudy8 - 1 Running head CASE STUDY EIGHT Case...

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