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9" Corporate Formatiao-sr7'
8 Reorganization and
Upon completing this chapter, you should be able to:
L0 8-1Review the taxation of property dispositions.
LO 8-2Compute the tax consequences to the
Corporate Operations and Book-Tax
Corporate Tax Rate Schedule
Example Corporate Tax Rate Schedule
Texas Corporation has taxable income of $17 million in
the current year.
Using the corporate tax rate schedule, what is Texas
Corporations are formed under State law by filing
Articles of Incorporation.
A number of decisions must be made including what
State to incorporate in, what assets will be transferred,
how to accomplish the tran
Entities Overview Choosing a
Business Form for Tax Purposes
S Corporation a C Corporation that makes a valid
election to be treated as a flow-through entity.
Partnerships General and Limited
Business Income, Deductions, and
Gross Income is all income from whatever
source derived. Examples include:
Revenue from services
Gross profit from inventory sales
Statutory exclusions from business gross
Section 707 Guaranteed Payments 1. T's only contribution to the partnership is services. What if the agreement is that T will receive $50,000 per year but will not share in the profits or loss? T was enticed to leave his job and become a partner in
Orrisch Allocations per the agreement Capital contribution Loss (before depreciation) Depreciation Basis at book value Equal Allocation at liquidation,per the court* Original capital Loss ($984 + $18,412 = $19,396) Distribution at liquidation Gain (l
Section 351 Rationale An exchange, but a mere change in form. The taxpayer is dealing with himself or herself. A deferral, not tax forgiven. Neutralize the tax laws regarding choice of entity. Uses Incorporate a proprietorship or partnership. Pool