心ti EUC
1 Chapter 2: Corporate Formations and Capital Structure
CORPORATE FORMATION Alternative business forms Check-the-box requlations Legal requirements for forming a corporation 8351 deferrals Choice of capital structure Worthless stock or debt obligations
2 CORPORATE FORMATION Alternative business forms Check-the-box regulations Legal requirements for forming a corporation §351 deferrals Choice of capital structure Worthless stock or debt obligations
Forms of business Sole proprietorships Partnerships Corporations Limited liability companies Limited liability partnerships 3
3 Forms of Business Sole proprietorships Partnerships Corporations Limited liability companies Limited liability partnerships
Sole Proprietorship (1of2) One owner Not a separate entity ncome reported on Sch C of 1040 No limited liability Tax advantages Profits taxed once No tax on contributions or withdrawals Losses other income(with limitations)
4 Sole Proprietorship (1 of 2) One owner Not a separate entity – Income reported on Sch C of 1040 No limited liability Tax advantages –Profits taxed once –No tax on contributions or withdrawals – Losses other income (with limitations)
Sole Proprietorship (2of2) Tax disadvantages Profits taxed as earned Owner not emplovee >>Profits subject to SE tax >No tax-free fringe benefits No fiscal year deferral 5
5 Sole Proprietorship (2 of 2) Tax disadvantages –Profits taxed as earned –Owner not employee »Profits subject to SE tax »No tax-free fringe benefits –No fiscal year deferral