Chapter 13 Comparative Forms of Doing Business Comparative Forms of Doing Business Copyright ©2008...

Chapter 13Chapter 13

Comparative Formsof Doing Business

Comparative Formsof Doing Business

Copyright ©2008 South-Western/Thomson LearningCopyright ©2008 South-Western/Thomson Learning

Corporations, Partnerships, Corporations, Partnerships, Estates & TrustsEstates & Trusts

C13 - C13 - 22Corporations, Partnerships, Estates & TrustsCorporations, Partnerships, Estates & Trusts

Choice of Form of Business Entity

Choice of Form of Business Entity

• Many factors affect the choice of business entity– Both tax and nontax– Understanding the comparative tax

consequences related to the different types of entities is important for effective tax planning

• Many factors affect the choice of business entity– Both tax and nontax– Understanding the comparative tax

consequences related to the different types of entities is important for effective tax planning


Principal Forms of Doing Business

Principal Forms of Doing Business

• Sole Proprietorship

• Partnership

• C corporation

• S corporation

• Limited liability company (LLC)

• Sole Proprietorship

• Partnership

• C corporation

• S corporation

• Limited liability company (LLC)


Limited Liability Company (LLC)Limited Liability Company (LLC)

• Hybrid business form that combines the corporate characteristic of limited liability for owners with tax characteristics of a partnership

• Hybrid business form that combines the corporate characteristic of limited liability for owners with tax characteristics of a partnership


Filing RequirementsFiling Requirements

C Corporation

•Files Form 1120

S Corporation

• Files Form 1120S

Sole Proprietorship

• Files Schedule C,

Form 1040

Partnership & LLC

• Files Form 1065


Nontax Factors—Capital FormationNontax Factors—Capital Formation

Sole Proprietorship

• Limited ability to raise capital

Partnership

• Can raise funds through pooling of owner resources

• Ltd. p’ship can raise capital from investors

C Corporation

• Greatest ease and potential for raising capital

S Corporation

• Greatest ease and potential for raising capital, but limited number of investors


Nontax Factors—Limited Liability

Nontax Factors—Limited Liability

Sole Proprietorship

• Unlimited liability

Partnership

• General partners are jointly and severally liable

• Ltd. partners’ liability is limited to investment

C Corporation

• Generally have limited liability

S Corporation

• Generally have limited liability


Other Nontax FactorsOther Nontax Factors

• Estimated life of business

• Number of owners and their roles in management of the business

• Freedom of choice in transferring ownership interests

• Organizational formality and related costs

• Estimated life of business

• Number of owners and their roles in management of the business

• Freedom of choice in transferring ownership interests

• Organizational formality and related costs


Single vs. Double TaxationSingle vs. Double Taxation

Sole Proprietorship

• Single taxation

Partnership and LLC

• Single taxation

C Corporation

• Double taxation

S Corporation

• Generally, single taxation

• May be subject to built-in gains tax and passive investment income tax


Alternative Minimum TaxAlternative Minimum Tax

Sole Proprietorship

• Directly subject to AMT

Partnership and LLC

• Indirectly subject to AMT

• AMT adjustments & preferences flow through and partners subject to AMT

C Corporation

• Directly subject to AMT

• May have advantage here since corp AMT rate is only 20%

S Corporation

• Indirectly subject to AMT

• AMT adjustments & preferences flow through and S/H’s subject to AMT


Controlling the Entity TaxControlling the Entity Tax

• Various techniques can be used to control the tax liability, whether imposed on the entity or owners, such as:– Distribution policy– Utilization of special allocations– Fringe benefits– Minimizing double taxation

• Various techniques can be used to control the tax liability, whether imposed on the entity or owners, such as:– Distribution policy– Utilization of special allocations– Fringe benefits– Minimizing double taxation


Fringe Benefits (slide 1 of 2)Fringe Benefits (slide 1 of 2)

• Generally produce the following tax consequences:– Deductible by entity (employer) providing the

fringe benefit– Excludible from gross income of taxpayer

(employee) who receives the fringe benefit

• Generally produce the following tax consequences:– Deductible by entity (employer) providing the

fringe benefit– Excludible from gross income of taxpayer

(employee) who receives the fringe benefit


Fringe Benefits (slide 2 of 2)Fringe Benefits (slide 2 of 2)

• Favorable tax treatment of fringe benefits is available only to employees– For owner of entity to be an employee, the entity must

be a corporation• Partners in a partnership are not employees

• Greater-than-2% shareholders in an S corp are treated as partners

– If not an employee• Deduction of cost of fringe benefit is disallowed

• Owner must include cost of fringe benefit in gross income

• Favorable tax treatment of fringe benefits is available only to employees– For owner of entity to be an employee, the entity must

be a corporation• Partners in a partnership are not employees

• Greater-than-2% shareholders in an S corp are treated as partners

– If not an employee• Deduction of cost of fringe benefit is disallowed

• Owner must include cost of fringe benefit in gross income


Minimizing Double Taxation of C Corporations (slide 1 of 5)


• Several techniques are available for reducing the double taxation of C corps including:– Making distributions to shareholders that are

deductible by corp– Retaining earnings at corp level– Making distributions treated as a return of

capital– Making the S corp election

• Several techniques are available for reducing the double taxation of C corps including:– Making distributions to shareholders that are

deductible by corp– Retaining earnings at corp level– Making distributions treated as a return of

capital– Making the S corp election




• Deductible distributions include:– Salary payments to shareholder-employees– Rental payments to shareholder-lessors– Interest payments to shareholder-creditors

• IRS scrutinizes these types of transactions– Must be reasonable

• Deductible distributions include:– Salary payments to shareholder-employees– Rental payments to shareholder-lessors– Interest payments to shareholder-creditors

• IRS scrutinizes these types of transactions– Must be reasonable




• Retain earnings at corporate level– Double tax is avoided unless corp makes distributions

(actual or deemed) to shareholders• Must watch out for accumulated earnings tax problems

– For distributions made in 2003 and thereafter the 15%/5% rate for qualified dividends reduces the potential negative impact of double taxation

• Retain earnings at corporate level– Double tax is avoided unless corp makes distributions

(actual or deemed) to shareholders• Must watch out for accumulated earnings tax problems

– For distributions made in 2003 and thereafter the 15%/5% rate for qualified dividends reduces the potential negative impact of double taxation




• Make return of capital distributions– For ongoing businesses, redemption provisions

may help reduce gross income at the shareholder level

– Corporate liquidation provisions can be used if business will cease to operate in corporate form

• Make return of capital distributions– For ongoing businesses, redemption provisions

may help reduce gross income at the shareholder level

– Corporate liquidation provisions can be used if business will cease to operate in corporate form




• Electing S corp status– Generally eliminates double taxation but other

factors must be considered such as:• Will all shareholders consent to election?• Can qualification requirements be met currently and

on an ongoing basis?• Are conditions favorable to an S corp election and

how long will those conditions be favorable• Distribution policy may cause problems paying tax

at shareholder level

• Electing S corp status– Generally eliminates double taxation but other

factors must be considered such as:• Will all shareholders consent to election?• Can qualification requirements be met currently and

on an ongoing basis?• Are conditions favorable to an S corp election and

how long will those conditions be favorable• Distribution policy may cause problems paying tax

at shareholder level


Entity Formation (slide 1 of 2)Entity Formation (slide 1 of 2)

• Generally, owners make contributions of cash and property to entity in exchange for an ownership interest– Generally, tax-free to both the entity and the owner

• In corporate setting, requirements of §351 must be met

– Owners and entities take a carryover basis in their ownership interest and in assets contributed, respectively

• Generally, owners make contributions of cash and property to entity in exchange for an ownership interest– Generally, tax-free to both the entity and the owner

• In corporate setting, requirements of §351 must be met

– Owners and entities take a carryover basis in their ownership interest and in assets contributed, respectively


Entity Formation (slide 2 of 2)Entity Formation (slide 2 of 2)

• If FMV of property contributed > adjusted basis, may want to make special allocation– Required in partnerships– Not available for C corps or S corps

• If FMV of property contributed > adjusted basis, may want to make special allocation– Required in partnerships– Not available for C corps or S corps


Basis ConsiderationsBasis Considerations

Sole Proprietorship

• N/A

Partnership and LLC

• Profits & losses affect partner’s basis

• Partner’s basis is increased by share of p’ship liabilities

C Corporation

• Shareholder’s basis is not affected by corporate profits & losses

S Corporation

• Shareholder’s basis is increased by profits, decreased by losses, not affected by corporate liabilities


DistributionsDistributions

• Distributions can be made to partners, LLC owners, or S corp. shareholders tax-free– The same distribution would produce dividend income

treatment for C corp. shareholders

• If appreciated property is distributed to S corp. shareholders, realized gain is recognized at the corporate level (same treatment as a C corp.)– This corporate-level gain is passed-through to the S

corp. shareholders

• Distributions can be made to partners, LLC owners, or S corp. shareholders tax-free– The same distribution would produce dividend income

treatment for C corp. shareholders

• If appreciated property is distributed to S corp. shareholders, realized gain is recognized at the corporate level (same treatment as a C corp.)– This corporate-level gain is passed-through to the S

corp. shareholders


Passive Activity Losses (slide 1 of 2)Passive Activity Losses (slide 1 of 2)

• Loss limits apply to owners of partnerships, LLCs, and S corps– Passive losses are separately stated items that

flow through to owners – Passive loss rules apply at the owner level

• Loss limits apply to owners of partnerships, LLCs, and S corps– Passive losses are separately stated items that

flow through to owners – Passive loss rules apply at the owner level


Passive Activity Losses (slide 2 of 2)Passive Activity Losses (slide 2 of 2)

• For corporations, only apply if a closely held corp or a personal service corp – Closely held corp—more than 50% of value of stock at

any time during last half of year is owned by 5 or less individuals

• Passive losses can offset active income but not portfolio income

– Personal service corp—principal activity is performance of personal services by owner-employees who own more than 10% in value of corp’s stock

• General passive loss rules apply

• For corporations, only apply if a closely held corp or a personal service corp – Closely held corp—more than 50% of value of stock at

any time during last half of year is owned by 5 or less individuals

• Passive losses can offset active income but not portfolio income

– Personal service corp—principal activity is performance of personal services by owner-employees who own more than 10% in value of corp’s stock

• General passive loss rules apply


At-Risk RulesAt-Risk Rules

• At-risk rules apply to:– Partnerships– LLCs– S corps– Closely held C corps

• May be more troublesome for partnerships and LLCs since liabilities are included in partner’s basis in partnership interest

• At-risk rules apply to:– Partnerships– LLCs– S corps– Closely held C corps

• May be more troublesome for partnerships and LLCs since liabilities are included in partner’s basis in partnership interest


Special AllocationsSpecial Allocations

• Partnership and LLCs have many opportunities to use special allocations– Not generally available in C corps and S corps

• May be able to achieve the same results using payments to owners for services, rents and interest

• Partnership and LLCs have many opportunities to use special allocations– Not generally available in C corps and S corps

• May be able to achieve the same results using payments to owners for services, rents and interest


Disposition of a Business or an Ownership Interest

Disposition of a Business or an Ownership Interest

• Disposing of a business may be viewed as either:– A sale of an ownership interest, or– A sale of assets

• Tax consequences are, in general, more favorable for a sale of an ownership interest

• Disposing of a business may be viewed as either:– A sale of an ownership interest, or– A sale of assets

• Tax consequences are, in general, more favorable for a sale of an ownership interest


Sale of Assets by Entity —Seller’s Issues (slide 1 of 3)


• Sole Proprietorship– Treated as a sale of separate assets– Gain or loss is calculated for each asset

• Character of income or loss depends on nature of asset

• Sole Proprietorship– Treated as a sale of separate assets– Gain or loss is calculated for each asset

• Character of income or loss depends on nature of asset




• Partnership, LLC, or S Corp—Same as proprietorship– Gain/loss flows through to shareholders or

partners• They report & pay tax on gain or loss

• Distribution of cash proceeds does not cause double tax since basis is adjusted by gain/loss

• Partnership, LLC, or S Corp—Same as proprietorship– Gain/loss flows through to shareholders or

partners• They report & pay tax on gain or loss

• Distribution of cash proceeds does not cause double tax since basis is adjusted by gain/loss




• C Corp—double taxation occurs– Gain is determined for each asset and tax paid

by corporation– Net cash is distributed

• Taxed as dividend, return of capital or capital gain to shareholder

• C Corp—double taxation occurs– Gain is determined for each asset and tax paid

by corporation– Net cash is distributed

• Taxed as dividend, return of capital or capital gain to shareholder


Liquidating Distribution of Assets to Owner Followed by Owner’s Sale to

Third Party (slide 1 of 3)



• Partnership– Distribution rules determine partner’s basis in assets

received from partnership

– Partner has gain if cash received > basis

– Partner has loss if cash, inventory and unrealized receivables are only assets rec’d and are < basis

– Character of gain on asset sale depends on nature of assets received by partner

– No double tax

• Partnership– Distribution rules determine partner’s basis in assets

received from partnership

– Partner has gain if cash received > basis

– Partner has loss if cash, inventory and unrealized receivables are only assets rec’d and are < basis

– Character of gain on asset sale depends on nature of assets received by partner

– No double tax






• S Corp– S Corp has gain if appreciated assets distributed

to shareholders– No corporate level tax unless “built-in gain”– Shareholder has gain (tax) on receipt of assets >

basis (after basis increase for gain)– Shareholder’s basis in assets = FMV, so no gain

on later sale of assets

• S Corp– S Corp has gain if appreciated assets distributed

to shareholders– No corporate level tax unless “built-in gain”– Shareholder has gain (tax) on receipt of assets >

basis (after basis increase for gain)– Shareholder’s basis in assets = FMV, so no gain

on later sale of assets






• C Corp– Double tax– Gain on distribution and tax at entity level– Net (after tax) assets distributed at FMV &

result in gain to shareholder

• C Corp– Double tax– Gain on distribution and tax at entity level– Net (after tax) assets distributed at FMV &

result in gain to shareholder


Purchase of Business Assets—Buyer’s Issues (slide 1 of 2)


• The purchaser of individual assets is not generally affected by the type of entity through which the seller operates:– The buyer (whether individual, partnership,

LLC, C corp or S corp) allocates the total amount paid to the individual assets acquired

– Part of the cost may be allocated to intangible assets such as goodwill

• The purchaser of individual assets is not generally affected by the type of entity through which the seller operates:– The buyer (whether individual, partnership,

LLC, C corp or S corp) allocates the total amount paid to the individual assets acquired

– Part of the cost may be allocated to intangible assets such as goodwill




• Asset cost is recovered through depreciation, amortization, sale of inventory, collection of accounts receivable, etc...

• The buyer can contribute the assets to a partnership or C corp under §721 or §351– If the C corp is qualified, an S corp election can

be made

• Asset cost is recovered through depreciation, amortization, sale of inventory, collection of accounts receivable, etc...

• The buyer can contribute the assets to a partnership or C corp under §721 or §351– If the C corp is qualified, an S corp election can

be made


Sale of Business Interest—Seller’s Issues (slide 1 of 3)


• Sole Proprietorship– No distinction between sale of interest or assets

• Partnership– Sale of partnership interest results in ordinary

income to partner for share of partnership’s ordinary income assets; capital gain for remainder

• Sole Proprietorship– No distinction between sale of interest or assets

• Partnership– Sale of partnership interest results in ordinary

income to partner for share of partnership’s ordinary income assets; capital gain for remainder




• S Corp– Sale treated as sale of stock

• Results in capital gain or loss to shareholder

– In general, no corporate-level consequences• However, if purchaser is not qualified shareholder,

S election is automatically terminated

• S Corp– Sale treated as sale of stock


– In general, no corporate-level consequences• However, if purchaser is not qualified shareholder,

S election is automatically terminated




• C Corp– Sale treated as sale of stock


– No corporate level consequences

• C Corp– Sale treated as sale of stock


– No corporate level consequences


Purchase of Business Interest—Buyer’s Issues (slide 1 of 3)


• If the purchaser acquires an interest in one of these types of entities, he or she is treated as follows:

• Sole Proprietorship– Purchaser is deemed to buy assets

• Purchase price is allocated to assets

• Assets are depreciated, amortized, etc...

• If the purchaser acquires an interest in one of these types of entities, he or she is treated as follows:

• Sole Proprietorship– Purchaser is deemed to buy assets

• Purchase price is allocated to assets

• Assets are depreciated, amortized, etc...




• Partnership– Purchaser buys partnership interest– Purchaser may ask partnership to make §754

election to step up inside basis in assets

• Partnership– Purchaser buys partnership interest– Purchaser may ask partnership to make §754

election to step up inside basis in assets




• S Corp or C Corp– Purchaser buys stock– There is no effect on underlying assets owned

by the entity

• S Corp or C Corp– Purchaser buys stock– There is no effect on underlying assets owned

by the entity


Tax Attributes of Different Business Forms (slide 1 of 19)


Maximum Max Tax Tax # Owners Rate Paid By

.

Sole Prop. One individual 35% OwnerPartnership At least two 35% Partner(or LLC)

S Corp. Max = 100 35% Shareholder Individuals, (Corp. may estates, some have built-in trusts only gains or PII

tax)

Maximum Max Tax Tax # Owners Rate Paid By

.

Sole Prop. One individual 35% OwnerPartnership At least two 35% Partner(or LLC)

S Corp. Max = 100 35% Shareholder Individuals, (Corp. may estates, some have built-in trusts only gains or PII

tax)




Maximum Max Tax Tax # Owners Rate Paid By .

C Corp No max limit 35% corporate Corporation (some States level plus pays first, require at 15% max. then owner

least two on qualifying pays if owners) distributions distribution

Maximum Max Tax Tax # Owners Rate Paid By .

C Corp No max limit 35% corporate Corporation (some States level plus pays first, require at 15% max. then owner

least two on qualifying pays if owners) distributions distribution




Tax Year Timing of Income Allowed Taxation Allocation .

Sole Prop. Owner’s yr. Owner’s N/A yr. end (1 owner)

Partnership Majority or End of p/ship Profit/lossLLC Principal tax year sharing ratio Ptrs or “least Some special aggregate allocations OK

deferral” year

Tax Year Timing of Income Allowed Taxation Allocation .

Sole Prop. Owner’s yr. Owner’s N/A yr. end (1 owner)

Partnership Majority or End of p/ship Profit/lossLLC Principal tax year sharing ratio Ptrs or “least Some special aggregate allocations OK

deferral” year




Tax Year Timing of Income Allowed Taxation Allocation

S Corp. Calendar year or End of Corp Per share, business purpose tax year per day

C Corp. No restrictions Corp reports at N/A (generally) end of tax yr; Shareholder reports dividends received

Tax Year Timing of Income Allowed Taxation Allocation

S Corp. Calendar year or End of Corp Per share, business purpose tax year per day

C Corp. No restrictions Corp reports at N/A (generally) end of tax yr; Shareholder reports dividends received




Contribution of Character of Income Property to Entity Taxed to Owners .

Sole Prop. Not taxable Retains source characteristics

Partnership Generally not Conduit-retains taxable source characteristics


Sole Prop. Not taxable Retains source characteristics

Partnership Generally not Conduit-retains taxable source characteristics





S Corp. Taxable unless Conduit-retains source meets §351 characteristics

C Corp. Taxable unless All source character- meets §351 istics lost when

income distributed to owners


S Corp. Taxable unless Conduit-retains source meets §351 characteristics

C Corp. Taxable unless All source character- meets §351 istics lost when

income distributed to owners




Loss Allocation Limitation on Loss to Owners Deductible by Owners

Sole Prop. Not applicable Amount invested plus liabilities of business

Partnership Profit and loss Ptr’s investment plus sharing ratios share of partnership liabilities


Sole Prop. Not applicable Amount invested plus liabilities of business

Partnership Profit and loss Ptr’s investment plus sharing ratios share of partnership liabilities





S Corp. Per share/ S/holder’s investment per day plus loans from s/holder to corporation

C Corp. Not applicable Not applicable


S Corp. Per share/ S/holder’s investment per day plus loans from s/holder to corporation

C Corp. Not applicable Not applicable




At-risk Rules Passive Loss Rules Applicable? Applicable? .

Sole Prop., Yes, at the Yes, at thePartnership owner, partner owner, partner orand S Corp. or shareholder shareholder level.

level. Indefinite Indefinite carryover carryover of of unused losses

unused losses

At-risk Rules Passive Loss Rules Applicable? Applicable? .

Sole Prop., Yes, at the Yes, at thePartnership owner, partner owner, partner orand S Corp. or shareholder shareholder level.

level. Indefinite Indefinite carryover carryover of of unused losses

unused losses




At- risk Rules Passive Loss Rules Applicable? Applicable? .

C Corp. Yes, for closely held Yes, for closely held corporations. Indefinite and personal service

carryover of unused corporations. losses. Indefinite carryover

of unused losses.

At- risk Rules Passive Loss Rules Applicable? Applicable? .

C Corp. Yes, for closely held Yes, for closely held corporations. Indefinite and personal service

carryover of unused corporations. losses. Indefinite carryover

of unused losses.




Capital Gains Capital Losses .

Sole Prop. Owner level Up to $3,000 against 5/15% tax ord. income. Indefinite carryover of excess.

Partnership Conduit-owners Conduit-owners and S Corp. report shares same report shares same as Sole Prop. as Sole Prop.

C Corp. Taxed at Corporate Carried back 3 yrs, level up to 35 %. forward 5. Can only offset capital gains.

Capital Gains Capital Losses .

Sole Prop. Owner level Up to $3,000 against 5/15% tax ord. income. Indefinite carryover of excess.

Partnership Conduit-owners Conduit-owners and S Corp. report shares same report shares same as Sole Prop. as Sole Prop.

C Corp. Taxed at Corporate Carried back 3 yrs, level up to 35 %. forward 5. Can only offset capital gains.




Consequence of Treatment of Earnings Retained Nonliquidating by Owners Distributions .

Sole Prop. Taxed when earned; Not taxable increases investment in S.P.

Partnership Same as S.P. Not taxable unless cash or liability

relief > Ptrs. basis

Consequence of Treatment of Earnings Retained Nonliquidating by Owners Distributions .

Sole Prop. Taxed when earned; Not taxable increases investment in S.P.

Partnership Same as S.P. Not taxable unless cash or liability

relief > Ptrs. basis




Consequence Treatment of Of Earnings Retained Nonliquidating

by Owners Distributions .

S Corp. Same as S.P. Generally not taxable unless distribution > AAA or

stock basis. May be dividend if E & P from Sub C year.

C Corp. Taxed to corp. as Taxed in yr received up to earned. Possible AE & P or if > stock basis. AE Tax.

Consequence Treatment of Of Earnings Retained Nonliquidating

by Owners Distributions .

S Corp. Same as S.P. Generally not taxable unless distribution > AAA or

stock basis. May be dividend if E & P from Sub C year.

C Corp. Taxed to corp. as Taxed in yr received up to earned. Possible AE & P or if > stock basis. AE Tax.




Sale of Ownership Interest .

Sole Prop. Treated as a sale of each asset. Gain character depends on asset nature.

Partnership Treated as sale of underlying ordinary income assets. Remainder treated as

sale of partnership interest (capital gain).


Sole Prop. Treated as a sale of each asset. Gain character depends on asset nature.

Partnership Treated as sale of underlying ordinary income assets. Remainder treated as

sale of partnership interest (capital gain).





S Corporation Treated as sale of corporate stock or C Corp. (capital gain). Loss may be ordinary

if §1244 applies, otherwise capital.


S Corporation Treated as sale of corporate stock or C Corp. (capital gain). Loss may be ordinary

if §1244 applies, otherwise capital.




Fringe Benefits §1244 Built-in

Avail. to Owners? Available? Gains effect?

Sole Prop. No No N/A

P’ship No No N/A

S Corp. Some if < 2% Yes Possible corp. owner level tax

C Corp. Available Yes No effect Limited by

anti-discrim.rules

Fringe Benefits §1244 Built-in

Avail. to Owners? Available? Gains effect?

Sole Prop. No No N/A

P’ship No No N/A

S Corp. Some if < 2% Yes Possible corp. owner level tax

C Corp. Available Yes No effect Limited by

anti-discrim.rules




§1231 Gains Foreign Tax

and Losses Credits .

Sole Prop. Taxable or deductible Owner level by owner. 5 yr. lookback rule.

Partnerships Conduit—same Conduit—sameand S Corps as S.Prop. as S.Prop.

C Corp. Taxable/deductible Available at corp. level 5 yr. Corporate level lookback rule

§1231 Gains Foreign Tax

and Losses Credits .

Sole Prop. Taxable or deductible Owner level by owner. 5 yr. lookback rule.

Partnerships Conduit—same Conduit—sameand S Corps as S.Prop. as S.Prop.

C Corp. Taxable/deductible Available at corp. level 5 yr. Corporate level lookback rule




Tax Alternative ACE Preference

Min. Tax Adjustment Items .

Sole Prop. Applies at N/A Determined at owner level owner level

(26% or 28%)

Partnership Applies at N/A Conduit—entity or S Corp. ptr or preferences

shareholder (26% or 28%) level pass thru to owners for their

AMT calc.

Tax Alternative ACE Preference

Min. Tax Adjustment Items .

Sole Prop. Applies at N/A Determined at owner level owner level

(26% or 28%)

Partnership Applies at N/A Conduit—entity or S Corp. ptr or preferences

shareholder (26% or 28%) level pass thru to owners for their

AMT calc.




Tax Alternative ACE Preference Min. Tax Adjustment Items .

C Corp. Applies at Corp. 75% x (ACE Subject to level (20%) -AMTI) is AMT at added to AMTI corporate (or subtracted) level

Tax Alternative ACE Preference Min. Tax Adjustment Items .

C Corp. Applies at Corp. 75% x (ACE Subject to level (20%) -AMTI) is AMT at added to AMTI corporate (or subtracted) level

Chapter 13 Comparative Forms of Doing Business Comparative Forms of Doing Business Copyright ©2008...

Documents

Transcript of Chapter 13 Comparative Forms of Doing Business Comparative Forms of Doing Business Copyright ©2008...