Passkey BUSINESS - Unit 13 C Corporations in General
Most major companies are C Corporations. Property can only be owned directly by the C
corporation. Shareholders of a C Corporation do not own its individual assets and are protected
from legal liabiliti
UNIT 6 Employer-Provided Fringe Benefits
Fringe Benefits for Employees: Some benefits are TAXABLE and NONTAXABLE.
Taxable Fringe Benefits: An employer MUST INCLUDE in a recipient's pay (W-2) the amount
by which the value of a fringe benefit is MORE THAN T
Passkey BUSINESS Unit 12 Partnership Distributions & Liquidations
Partnership Distributions: Partnership Distributions INCLUDE the following: 1. Distributions
of the partnerships Earnings for the current or prior years. 2. A Withdrawal by a partner in
Passkey BUSINESS Unit 15 Corporate Distributions & Liquidations
Corporate Distributions or Dividends: They are profits paid out proportional to shareholders
ownership of stock. The amounts a corporation pays as Dividends are not deductible expenses.
Passkey BUSINESS Unit 14 Corporate Transactions
Capital Gains and Losses: C corporations are subject to their own tax rate schedules. Unlike the
capital gains rates of individuals, the capital gains of corporations are taxed at the same rate as
Unit 11: Partnerships in General
Partnership Basics: An unincorporated business with 2 or more members is generally classified
as a partnership for federal tax purposes. Unlike a corporation, a partnership does NOT REQUIRE
any Formal legal documents. A pa
Unit 10: Disposition of Business Assets
Capital Assets: Are personal property including stocks, bonds unless held by a professional
securities dealer. A gain from the DEPOSITION of personal-use property is a capital gain, but a
loss is generally NOT deduc
UNIT 4: Business Income
Gross income to a business includes all types of income, Unless SPECIFICALLY EXEMPT, in
the form of MONEY, PROPERTY, OR SERVICES.
Sources of Income for a Business include all the following: 1. Income received for Services, 2.
UNIT 7: Business Credits & Deductions
Net Operating Losses (NOLs): The Default Election, called the CARRY BACK PERIOD, is to
Carry Back 2 years, a Net Operating Loss. Then the business can carry Forward any remaining
NOL for up to 20 years. A business may
Unit 5: Business Expenses
Business Expenses are usually deductible if the business operates to make a profit. Some Expenses
must be treated differently than others, and some must be capitalized and depreciated.
Expenses under the Accrual Method: Under the
Passkey BUSINESS - Unit 9 Depreciation of Business Assets
Capital Expenditures (Capitalized Property): Under the IRC, certain COSTS and PURCASES
must be CAPITALIZED, including the following.
SAI (Start-Up Costs, Business Assets, Business Improvements)
Unit 8 Basis of Business Assets
Taxpayers must CAPITALIZE the Cost of Business Assets, rather than DEDUCT them in the
year the cost is incurred.
Cost Basis of Business Assets: The basis of property is usually its cost, the amount a business pays
for an as
Passkey BUSINESS - UNIT 3: Accounting Periods and Methods
Tax Years: You have to report income and expenses for a Calendar Year, Fiscal Year or Short Tax
Calendar Tax Year: Occurs between January 1st and December 31st.
Fiscal Tax Year: 12 consecutiv
Passkey BUSINESS Unit 2 IRS Business Requirements
Recordkeeping Requirements for Businesses: The law does not require a business to keep any
specific kind of records or use a particular recording keeping system. ALTHOUGH, the system has
to clearly disting
Passkey - Unit 1: Business Entities in General
Sole Proprietorship: Sole proprietors often receive a FORM 1099-MISC from their customers
showing income they were paid.
EIN# Not Required if No Employees: For Sole Proprietors an EIN# is not required if he o