Chpters - Corporation formation and finance In certain...

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Corporation formation and finance In certain situations, the corporate “veil” of limited liability can be pierced, holding the shareholders personally liable. Shareholder can sue corporation and be sued by corporation and bring suit for corporation in some instances (derivative action). Corporate profits can either be kept as retained earnings or passed on to the shareholders as dividends . A corporation is liable for the torts committed by its agents or officers within the course and scope of their employment under the doctrine of respondeat superior . Corporation can be liable for criminal acts, but only fined. Responsible officers may go to prison. Domestic corporation does business in its state of incorporation. Foreign corporation from X state doing business in Z state. Alien Corporation: formed in another country doing business in United States. S Corporations”: Avoids the federal “double taxation” of regular corporations at the corporate level. Only dividends are taxed to the shareholders as personal income. IRS requirements: Promoter is personally liable for pre-incorporation contracts on behalf of the corporation, unless 3 rd party agrees to hold future corporation liable. After corporate formation, corporation can adopt the pre-incorporation contract and
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This note was uploaded on 12/03/2011 for the course HIST 101 taught by Professor M during the Spring '11 term at NJIT.

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Chpters - Corporation formation and finance In certain...

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