Chapter 15 Prob 83 Homework week 5

Chapter 15 Prob 83 Homework week 5 - Chapter 15: Problem 83...

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Chapter 15: Problem 83 Required questions to answer: a. Identify significant tax and non tax issues or concerns that may differ across entity types. b. Provide your recommendation for forming CCS as a C corporation, S corporation, LLC, or partnership. Explain your reasoning for your choice of entity, identify any issues that you may still be concerned about, and suggest recommendations for dealing with the concerns. When forming a new business, business owners must carefully evaluate and analyze what type of business entity will maximize the after-tax profits from their business ventures and several issues need to be reviewed. When making the entity selection decision, owners must carefully review the non-tax related issues would consist of the time and cost to organize the entity. Earlier this week in class we discussed and compared, Corporations (both taxable and S corporations) generally are more difficult to form. Partnerships tend to be easier to form. Corporations and LLCs provide better liability protection for their owners than general partnerships. Dawn is concerned about the risks of the business and should consider it with both forms.
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Dawn, Linda, and Mike want flexibility in their company. Dawn and Linda will be the most active in achieving business performance. Mike on the other hand, feels the company will grow and is willing to give 40% of cash investment, but does not wish to be actively involve. It will be reasonable for Dawn and Linda to be compensated based on their business performance. In doing this, a partnership would be a good option. The tax-related issues are that since the agreement does not meet the 80 percent control test because
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Chapter 15 Prob 83 Homework week 5 - Chapter 15: Problem 83...

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