CHAPTER3-LECTURE1.doc - CHAPTER 3 CORPORATIONS INTRODUCTION OPERATING RULES AND RELATED CORPORATIONS I VARIOUS BUSINESS FORMS(COVERED IN CHAPTER 2(1

CHAPTER3-LECTURE1.doc - CHAPTER 3 CORPORATIONS INTRODUCTION...

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CHAPTER 3CORPORATIONS: INTRODUCTION, OPERATINGRULES, AND RELATED CORPORATIONSI.VARIOUS BUSINESS FORMS (COVERED IN CHAPTER 2)(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 THEINCOME (IE. ENTITY OR BENEFICIARY)(FORM 1041 (AND SCHEDULE K-1))(COVERED IN ACCOUNTING 4322)(4)S CORPORATIONS(TAXED (TREATED) SIMILAR TOPARTNERSHIPS)(FORM 1120S (AND SCHEDULE K-1))(CHAPTER 12)
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(5)REGULAR CORPORATIONS(C CORPORATIONS)(TAXABLE ENTITY; DIVIDENDSDISTRIBUTED TO SHAREHOLDERS ARETAXABLE TO SHAREHOLDERS. THUS,DOUBLE TAXATION)(FORM 1120 (OR FORM 1120-A PRIOR TO JANUARY 1, 2007))(CHAPTERS 3 THROUGH 7)II.WHAT IS A CORPORATION?(STATE LAW DOES NOTGOVERN)(1)DISREGARD OF CORPORATE ENTITY(WHEN THERE IS A LACK OF SUBSTANCEFOR THE CORPORATION OR THERE ISLITTLE 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)
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SIX CORPORATE CHARACTERISTICS(1)ASSOCIATES(2)OBJECTIVE TO CARRY ONBUSINESS AND DIVIDE GAINS THEREFROM(3)CONTINUITY OF LIFE(4)CENTRALIZED MANAGEMENT(5)LIMITED LIABILITY(6)FREE TRANSFERABILITY OFOWNERSHIP INTERESTSIF AN UNINCORPORATED ENTITY POSSESSES MORE THAN HALF OF THESE
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