Business Entity Forms - Frequently Asked Questions
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Business Form - Frequently Asked Questions
The following are some of the most frequently asked questions about how a form of doing
business will effect various business transactions, risks, taxes, bookkeeping, payroll and
other issues. The first portion is a listing of some common business types.
You can double click any term to read a very brief definition of the type. That
link will take you to a (different) glossary page. YOU WILL NEED TO PRESS THE
"BACK" BUTTON ON YOUR BROWSER TO SOME BACK TO THIS PAGE. THIS PAGE - WHEN
YOU PAGE DOWN WILL SHOW YOU TEH QUESTIONS AND THEN YOU CAN LINK TO THE ANSWERS.
Scroll down to the "Listing of Questions". Double click the
question to find the answer.
Glossary:
The business types are:
Sole Proprietorship
Partnership - General
Partnership - Limited
Corporation - C Corporation
Corporation - S Corporation
Limited Liability Company
Registered Limited Liability Company
Family Limited Partnership
If there are other questions please Email Bob Parrish CPA at pro1040
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- How does the form effect my personal liability or risk ?
- How does the form effect my control and management ?
- What might end the existence of each form ?
- What is the legal status of the form ?
- What about selling or transferring my ownership in the business
?
- How simple is it to setup ?
- How easy is it to obtain outside financing ?
- What about dissolution ?
- What about federal income tax implications ?
- How many co-owners/partners can I have with each ?
- Who is eligible to own a part of the company ?
- What about paying out money, wages, and shared income ?
- Who will the IRS audit ?
- What year end may I use ?
- Can I change the "pass through" status ?
- What about an inadvertent termination of the pass through
status ?
- Who is taxed and at what tax brackets ?
- What about payout of profits or money after the end of
the year ?
- What about allocating the income, deductions and any tax
credits ?
- What about family members ?
- What about buying an ownership interest/share by trading
property (tax free) ?
- What does "basis" mean and how is it effected by
each type of form ?
- What about changes to the basis ?
- What about liabilities that I must guarantee ?
- What about transferring property with a loan on it to
the business ?
- Can I use all of the loss to offset other income I earn ?
- What happens if I have a new owner that buys a share of the
business, after the business has become worth more than at the beginning ?
- What about cash distributions ?
- What about distribution of appreciated property
to owners ?
- What about the company buying back the ownership interest ?
- What about a complete liquidation of the business ?
- What effect does the form have on tax free
reorganization ?
- What if I sell the common stock or my ownership interest in
the business ?
- What if my business becomes worthless or I must sell at a
loss ?
- What about fringe benefits ?
- What about retirement plans ?
- What happens if I keep profits in the business (I do
not pay them out) ?
- What happens if my business has passive investment
income ?
- Are some of my deductions limited in the amount I
can deduct ?
- What about charitable contributions ?
- What about capital gains and losses ?
- What about tax preference items ?
- Is there an investment interest expense limitation
?
- What about passive loss rules ?
- What about transactions between me and my business -
gain ?
- What about transactions between me and my business -
loss ?
- What about expenses owed by the business to me ?
- What about the basis when I pass on ?
- What about the income in the year of passing on of the
owner ?
- What if I provide service to pay for the
ownership interest ?
- What about state income taxes ?
- What accounting method may I use ?
- What about salaries paid to the owners ?
- What about real estate type business ?
- What about start up ventures ?
- What about a closely held business ?
- What about oil and gas operations ?
- What about professional services ?
- Family Limited Partnerships
- Federal Income Taxes
How does the form effect my personal liability or risk?
In very broad and general terms the sole proprietor and the general partner have the
most risk. The limited partner, the shareholder and the LLC member have the least
amount of risk. Here are some risks you should consider:
- Personal injury suits from any person in or on your business premises
- Personally injury from vehicular accidents where you are the driver or someone is using
your automobile
- Damage you or someone working in or for your business causes to nearly any person or
property, such as any damage considered more than normal wear, spills, etc.
- Claims from other sources including customers or clients, inadvertently implying
warranties, misrepresentation, or any number of sources which can unexpectedly prove
hostile to your business or yourself. I have a friend working as a real estate
agent. The friend informed a purchaser that a home had approximately a specified
number of square feet. The area was off by about 20 square feet and the friend lost
tens of thousands of dollars after the attorney's fees, court costs and the purchaser had
their way with my friend. I have another friend who sells appliances. A
customer asked whether a refrigerator on display was a good unit. The person
responded with yes this is a "good unit". By the time the customer and the
legal fees were completed (the defense counsel made an error in the process) my friend had
a judgement against him, threatened execution of a sheriff's sale of his personal
residence and spent $25,000 to protect himself. I have another friend that sells
sand. Some sales are for application on icy roads, some sand is sold to companies
that use the sand for sandblasting. My friend was named in a lawsuit that was
against his customers and the manufacturer's of the sandblasting equipment because the
workers refused to wear the protective respirators. By the time this fiasco was
ended my friend (which played NO PART in any of the uses of the sand) had spent between
$50,000 and $100,000 in legal fees, court costs and reporting costs through electing the
protection of the bankruptcy courts. I have another friend who purchased a product
to discover after its purchase it was misrepresented and did not function as described.
This cost him $85,000 in lost income and in all probability some lost customers.
He made a claim on the product's warranty, asked for the money paid to date to be
refunded and a cancellation of the contract for the second year of use. The company
personnel claimed this request would be sent for approval and after more than a year the
friend received notice that he was being sued in the home state of the company for the
remainder of the contract. He hired an attorney in the foreign state for defense and
a cross claim. The attorney did not appear for the trial, claiming he was not
notified and a default judgement was granted by the court. The judgement was
transferred to my friends state of residence and the sheriff demanded him to remove his
personal belongings from his office so that the building could be auctioned. Because
my friend was a sole proprietor he and his wife had to claim complete bankruptcy and ended
up in a complete liquidation of all the family's non-exempt assets.
Each business example has ended up with the main part of the income production side of
the person in very long term problems. Financing will be very difficult if at all
possible and at the best very costly.
Personally - I do not care how confident your are that none of this will happen
to you. The confidence, rose colored glasses, and positive attitude are completely
irrelevant! A small amount of protection now is well worth the time spent to protect
your life style and future earning capability.
It is much more practical to receive an inoculation for polio, tuberculosis or small
pox than to suffer the illness and allow the physician to treat the symptoms and kill the
virus after you have gotten the disease. Please inoculate your business!
Sole Proprietorship
You will be personally liable for all debts of the business. All notes, all
accounts payable all leases or lease purchases are your personal responsibility. In
addition, this means that all your personal assets, savings, property, real estate, etc.
are open to judgements won by any party. Only those assets protected by the
Bankruptcy Law of your state are protected. In some cases it may become necessary to
file bankruptcy to obtain protection of the Bankruptcy Law Exemptions. You must know
both your state's laws and federal laws. In addition to actions from creditors, the
proprietor is subject to risk from any lawsuit, such as torts, personal injury, employee
injuries, vehicle accidents, environmental and other litigation. Taxes (income,
payroll, unemployment, sales, property etc.) are the responsibility of the proprietor.
Corporation
Shareholders are not generally liable for any debts of the corporation. If the
shareholder has been required to sign a loan guarantee or has inadvertently signed as an
individual (failing to use the corporate name) then the corporate limited liability is not
available to the shareholder. This does not cover any circumstance in which the
shareholder is proven to be negligent. As long as the shareholder has not signed any
agreement to the contrary then the corporation is generally liable for:
- All notes, all accounts payable all leases or lease purchases
- Risk from any lawsuit, such as torts, personal injury, employee injuries, vehicle
accidents, environmental and other litigation
- Taxes (income, payroll, unemployment, sales, property etc.) With the corporation, the
payroll taxes withheld from the payroll checks, can be collected from any responsible
party including a shareholder and/or officer - and at times, other employees
The assets of the corporation are at risk, but generally not the
assets you own personally.
If Bankruptcy becomes a part of your plan, the corporation form may provide a means to
have the corporation file for bankruptcy and not require a filing for you personally.
S Corporation
The S Corporation is very much like the C Corporation. However, there is a
difference. The income taxes of the S Corporation form are your personal
responsibility, not that of the corporation.
Partnerships - general
A general partner of either the general partnership or the limited partnership is
usually liable for the debts and risks, and taxes of the business. This is very
similar to the sole proprietorship.
Partnerships - limited
If you are a limited partner the liability is usually limited to the amount of capital
contributed or for which you are required to pledge.
Registered Limited Liability Partnership
Same as limited partnership, except there are no general partners.
Limited Liability Company
Same as for the C Corporation, except that the tax liability is that of the members, as
the income tax rules for partnerships are followed.
Start of Plain English Section
Sole Proprietorship
As sole proprietor and sole owner, there is complete control and management vested in
the only owner of the business.
Corporation
Usually flexible. The board of directors sets policies and appoints officers of
the corporation. In a large corporation control is often in the hands of officers
and top levels of management. In a closely held corporation management is often in
the control of the owner(s).
S Corporation
Same as the corporation without the S Election. However there are rules which
must be followed which limit the total number of shareholders, and who can be a
shareholder.
Partnerships - general
The general partners manage the business.
Partnerships - limited
Same as the general partnership.
Registered Limited Liability Partnership
Management structure is determined by the members/
Limited Liability Company
Flexible. The management structure is set by the members and enumerated in the
operating agreement.
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In very broad and general terms the owner(s) of any business, regardless of the type or
form of the business can dissolve any business. This usually can be done at any time
the majority of the owners or the general partners agree to the dissolution. The
details of the dissolution will be the varying factors for each of the types.
Sole Proprietorship
Death or incapacity of the owner will end the business. Otherwise, the life of
the business is in the control of the sole proprietor.
Corporation
The life of the Corporation will be for perpetuity. The shareholders and the
articles of incorporation can be used to limit the life if desired. The corporation
can be dissolved or liquidated.
S Corporation
The life of the S Corporation will be for perpetuity. The shareholders and the
articles of incorporation can be used to limit the life if desired. The corporation
can be dissolved or liquidated. There are some "tricky" aspects of using
the S Corporation election, in that if you violate the IRS provisions for the election,
the election can be ended without your consent. There are methods of relief, but you
must use your accountant to assist with the formation, the monitoring and if it becomes
necessary requesting relief from an inadvertent termination.
Partnerships - general
In very broad terms, the partnership will last only for the time specified and agreed
upon by the partners. In addition, the death or withdrawal or disability of a
general partner may terminate the partnership for state purposes (but not federal
purposes).
Partnerships - limited
See the General Partnership note. Any death, etc. of a limited partner usually
will NOT effect the partnership.
Registered Limited Liability Partnership
See the limited partnership rules.
Limited Liability Company
The LLC must have a limited life. This is one of the rules that
must adhere to your state's Uniform LLC Act. The LLC must fail the
corporate resemblance test.
Start of Plain English Section
You should have concern about this question. Another statement to convey the
concern is - "Will the business be separate from me, file its own tax return, pay its
own taxes, etc?"
Sole Proprietorship
This is not a separate entity.
Corporation
Complete separation from all owners and is recognized as a separate entity. The
corporation will not only file its own tax return, but it will also be responsible for its
own taxes.
S Corporation
Complete separation from all owners and is recognized as a separate entity. The
corporation will file its own tax return, but you will be responsible
for its taxes.
Partnerships - general
This is a separate legal entity. However, if you are a general partner then you
have full risk and exposure to any "bad thing". In addition, even though
the partnership will file its own tax return, you will be responsible for the taxes.
Partnerships - limited
This is a separate legal entity. However, if you are a general partner then you
have full risk and exposure to any "bad thing". In addition, even though
the partnership will file its own tax return, you will be responsible for the taxes.
Registered Limited Liability Partnership
Same as LP
Limited Liability Company
Same as regular corporation, except that you will be responsible for the income taxes.
Start of Plain English Section
If you are the only owner of the business you are generally free to transfer the
ownership at your own will. You may have to make certain state filings or adhere to
federal tax legislation. Some agreements you make with lenders and other sources of
capital may place restriction on you, but you should have made yourself aware of those
restrictions when you obtained the capital.
In general you will have the choice of the item or items to sell. You can sell,
abandon, gift, trade, retain any selected property. You will have the choice of
either receiving the full purchase price now, in the future or over an agreed upon number
of installments.
If you are not the only owner, then usually you will need to have a signed agreement
with the other owners before you enter into the transfer process. You may be
required to first offer your share to the other owners. There can be other factors
that become a part of the process depending upon the entity type. Usually if you are
in business with other owners, you will not have the choice of which assets you sell or
retain or the method of sale or collection of the sales proceeds. If all the
owners decide to liquidate and come to an agreement on the details above then some of
the flexibility of the sole proprietorship may become part of the sales process.
Sole Proprietorship
You are the sole owner. You make the decision. The only restrictions
usually will be those from lenders, and other sources of borrowing or capital. The
taxes on the sale are your individual responsibility and, if married, that of your spouse.
There may be ordinary gain and capital gain characteristics in the sale. You
can dispose of the assets at your will, selling some, gifting some or retaining others.
The choices to you are those listed in the introductory paragraphs of the
transferability section.
Corporation
Usually common stock is freely transferable. However even this can be changed by
the bylaws. Many times a closely held corporation will want to provide restrictions
on the sale of the stock. There can be buy-sell agreements, first right of refusal
agreements and other covenants and restrictions.
S Corporation
See the Corporation paragraph
Partnerships - general
Normally a transfer (sale, etc.) will require approval and a written agreement from all
the general partners. If a person holding in excess of 50% is the person making the
transfer, in many cases the partnership will cease to exist. Check your state
statutes on this circumstance.
Partnerships - limited
Limited partners usually can freely transfer an interest in a limited partnership.
There are some partnership agreements written so that even the limited partners are
prevented from transfer without the consent of a general partner.
Normally a transfer (sale, etc.) will require approval and a written agreement from all
the general partners. If a person holding in excess of 50% is the person making the
transfer, in many cases the partnership will cease to exist. Check your state
statutes on this circumstance.
Registered Limited Liability Partnership
Read the limited partnership section
Limited Liability Company
Read the limited partnership section. Usually the consent of the other partners
must be obtained in writing.
Start of Plain English Section
Here are some general statements to read before you look at the details:
- The least expensive and most straight forward path is to use the sole proprietorship.
It has many risks.
- Partnerships are usually the most prone to problems. Agreements must be drafted.
If this is a limited partnership , RLLP, or LLC, then specific state filings and
state laws must be complied with.
- Regular "C" Corporations without the "S" Election will fall in
between the proprietorship and the partnerships. The "S" Election is not
difficult to elect, but some simple rules must be followed. As with the partnership
if you have more than one owner, or have capital furnished by a party other than a sole
owner there will be difficulties. The Corporation is not difficult to form, the
filings are usually quickly accomplished.
- Please notice that for the legal portions the partnerships will usually be a little more
difficult than the Corporation and significantly more difficult than a proprietorship.
In addition, any form of business with more than one owner will be difficult,
regardless of the business type.
Sole Proprietorship
This form of business applies to a business when there is only one owner. It does
not apply to two or more owners. This form is automatic. No election and no
filing needs to be made. In fact if no other alternative is made, the sole
proprietorship is the default form. No legal counsel needs to be engaged to prepare
articles, or filing with the secretary of state. If you want to "protect"
or "reserve" a name for your business, then you will need to file an
"Assumed Name Certificate".
Business licenses, occupation taxes, professional licensing fees, etc. are usually as
expensive for the proprietor as any other form.
Corporation
Both the "S Corporation" and the "C Corporation" are formed in the
same manner. See the S Corporation section to see what differances exist in the
filing with the Internal Revenue Service. The forming of the corporation is well
worth any additional costs. If you are starting your business new, you can form the
corporaiton from yourself, buy a corporate "kit" or hire an attorney.
Usually the CPA will not draft the actual documents for you because the legal profession
views this as "practicing law". Some accountants will provide a
"typing service" for the Articles of Incorporation, the Corporate Bylaws and
then list you as the "incorporator" and ask you to perform the mailing, and
notify you that the service has risks and the CPA is not licensed in law.
NOTE: Even a one person business can incorporate !
In very broad terms the process will include:
- Composing the Articles of Incorporation
- Filing same with the Secretary of State
- Composing Corporate Bylaws
- Conducting organizational meeting
- Preparing related documents such as resolutions appointing designated persons for
banking and signatures, tax elections, etc.
S Corporation
The S Corporation will be formed just like the C Corporation. All setup pursuant
to your state is the same as the C Corporation. However, to make your S Corporation
valid, you must file a timely election with the Internal Revenue Service.
The U.S. Legislature has mandated that the Internal Revenue Service provide taxpayers
relief from the prohibition of the S Corporation simply because the election was field
late. Refer to Revenue Procedure
97-40 for the details
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
How Easy Is It To Obtain Outside Financing ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about federal income tax implications ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
How many co-owners/partners can I have with each ? (10)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Who is eligible to own a part of the company ? (11)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about paying out money, wages, and shared income ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Who will the IRS audit ?
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[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What year end may I use ?
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[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Can I change the "pass through"
status ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about an inadvertent termination of the pass
through status ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Who is taxed and at what tax brackets ? (17)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about payout of profits or money after the end
of the year ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about allocating the income, deductions and any
tax credits ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about family members ? (20)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about buying an ownership interest/share by trading
property (tax free) ? (21)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What does "basis" mean and how is it
effected by each type of form ? (22)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about changes to the basis ? (23)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about liabilities that I must guarantee ? (24)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about transferring property with a loan on it
to the business ? (25)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Can I use all of the loss to offset other income I earn ?
(26)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What happens if I have a new owner that buys a share of
the business, after the business has become worth more than at the beginning ? (27)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about cash distributions ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about distribution of appreciated
property to owners ? (29)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about the company buying back the ownership
interest ? (30)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about a complete liquidation of the business ?
(31)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What effect does the form have on tax free
reorganization ? (32)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What if I sell the common stock or my ownership interest
in the business ? (33)
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What if my business becomes worthless or I must sell
at a loss ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about fringe benefits ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about retirement plans ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What happens if I keep profits in the business
(I do not pay them out) ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What happens if my business has passive investment
income ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Are some of my deductions limited in the
amount I can deduct ?
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[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about charitable contributions ?
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[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about capital gains and losses ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about tax preference items ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Is there an investment interest expense
limitation ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about passive loss rules ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about transactions between me and my
business - gain ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about transactions between me and my
business - loss ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about expenses owed by the business to
me ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about the basis when I pass on ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about the income in the year of passing on of
the owner ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What if I provide service to pay for the
ownership interest ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about state income taxes ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What accounting method may I use ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about salaries paid to the owners ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about real estate type business ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about start up ventures ?
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about a closely held business ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about oil and gas operations ?
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
What about professional services ?
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Family Limited Partnerships
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
Federal Income Taxes
Start of Plain English Section
[This is the answer to the question.]
Sole Proprietorship
Corporation
S Corporation
Partnerships - general
Partnerships - limited
Registered Limited Liability Partnership
Limited Liability Company
By Bob Parrish CPA.
Copyright © Bob Parrish. All rights reserved.
Revised: February 26, 2007.
I shall always strive to accomplish your goals, and to keep
your planning in balance. You will find no other adviser or groups of
advisers that has your potential and your security more in focus than I.
All rights reserved.
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Help To Keep Your Life In Balance
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