Escolar Documentos
Profissional Documentos
Cultura Documentos
Entities Overview
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Learning Objectives
1.
2.
3.
15-2
15-3
15-4
15-5
Nontax Characteristics
15-6
Nontax Characteristics
15-7
15-8
Tax
C Corp
Separate tax
S Corp
Flow-through
Partnership
Flow-through
Sole proprietorship
Flow-through
15-10
Unincorporated entities
15-11
Double Taxation
15-12
Double Taxation
Tax rate depends on whether corporations retain their aftertax earnings and the type of shareholder
15-13
Individual Shareholders
15-15
Example 15-2
Assume that Nicole did some income projections to help
her determine the taxable form of her business. She makes
the following assumptions:
Example 15-2
Assume that Nicole did some income projections to help
her determine the taxable form of her business. She makes
the following assumptions:
Earnings Distributed
Corporate Shareholders
15-18
Institutional Shareholders
Earnings Distributed
15-19
15-20
15-21
15-22
Example 15-6
Assume that Nicole will organize CCS as a C corporation
and that in spite of her best efforts as CEO of the
company, CCS reports a tax loss of $50,000 in its first
year of operation (year 1). Also, recall Nicoles marginal
tax rate is 33 percent and assume she will have ordinary
taxable income of $200,000 from her husbands salary in
year 1. How much tax will CCS pay in year 1 and how
much tax will Nicole (and her husband) pay on the
$200,000 of other taxable income if CCS is organized as
a C corporation?
15-23
15-24
Example 15-6
Suppose CCS is organized as an S corporation
and Nicoles basis in CCS before the year 1 loss is
$100,000. CCS reports a tax loss of $50,000 in its
first year of operation (year 1). Also, recall Nicoles
marginal tax rate is 33 percent and assume she
will have ordinary taxable income of $200,000 from
her husbands salary in year 1. How much tax will
CCS pay in year 1, and how much tax will Nicole
(and her husband) pay on the $200,000 of other
income?
15-25
15-26
15-27
C corporations
15-28
Homework
15-29