The business Environment Limited Liability Companies-A business form that provides its owners (called members)with corporate-style lmited personal liability and the federal-tax treatment of a partnershi o Business income is accounted for on each member's individual income tax form 2-11
2-11 The Business Environment Business income is accounted for on each member’s individual income tax form. Limited Liability Companies -- A business form that provides its owners (called members) with corporate-style limited personal liability and the federal-tax treatment of a partnership
Limited Liability Company(LLC Generally, an LLC will possess only the first two of the following four standard corporation characteristics Limited liability Centralized management Unlimited life Transfer of ownership without other owners?prior consent 2-12
2-12 Limited Liability Company (LLC) Limited liability Centralized management Unlimited life Transfer of ownership without other owners?prior consent Generally, an LLC will possess only the first two of the following four standard corporation characteristics
Summary for LLC Advantages Disadvantages Limited liability Limited life Eliminates double (generally) taxation Transfer of No restriction on ownershi number or type of difficulties owners (generally Easier to raise additional capital 2-13
2-13 Summary for LLC Advantages Limited liability Eliminates double taxation No restriction on number or type of owners Easier to raise additional capital Disadvantages Limited life (generally) Transfer of ownership difficulties (generally)
Corporate Income Taxes Corp Taxable Income Tax At least But rate Tax Calculation 0$50,00015% 15(nc>0) 50.000 75,00025%$7,500+25X(nc>50,000) 75,000100,00034%13,750+34x(|nc>75,000) 100,000335,00039%22.250+39X(nc>100,000) 335,00010,000,00034%113900+34X(nc>335,000) 10,000,00015,000,00035%3400,000+35x(nc>10000000) 15,000,00018333,33338%5150,000+38x(lnc>15,000,000) 18333,333 35%6,416667+35x(lnc>18,333333 2-14
2-14 Corp. Taxable Income Tax At Least But < Rate Tax Calculation $ 0 $ 50,000 15% .15x(Inc > 0) 50,000 75,000 25% $ 7,500 + .25x(Inc > 50,000) 75,000 100,000 34% 13,750 + .34x(Inc > 75,000) 100,000 335,000 39% 22,250 + .39x(Inc > 100,000) 335,000 10,000,000 34% 113,900 + .34x(Inc > 335,000) 10,000,000 15,000,000 35% 3,400,000 + .35x(Inc > 10,000,000) 15,000,000 18,333,333 38% 5,150,000 + .38x(Inc > 15,000,000) 18,333,333 35% 6,416,667 + .35x(Inc > 18,333,333) Corporate Income Taxes
Income Tax Example Lisa miller of basket wonders ( BW is calculating the income tax liability, marginal tax rate, and average tax rate for the fiscal year ending December 31 BWs corporate taxable income for this fiscal year was $250,000 2-15
2-15 Income Tax Example Lisa Miller of Basket Wonders (BW) is calculating the income tax liability, marginal tax rate, and average tax rate for the fiscal year ending December 31. BW‘s corporate taxable income for this fiscal year was $250,000