On January of the Current Year,rae Purchases 100% of Sun
On January of the current year,Rae purchases 100% of Sun Corporation stock for $30,000.Sun Corporation reports taxable income of $25,000 in the current year,on which it pays tax of $3,750.None of the remaining $21,250 is distributed to Rae.However,on January 1 of the next year,Rae sells her stock to Lee for $51,250.What are the tax consequences to Rae of the sale?
What are the tax consequences to Whitney who owns 50% of Museum Corporation,a qualifying S Corporation that is a calendar-year entity,if Museum Corporation reports $60,000 of taxable income? How would your answer change if Museum Corporation reported a $40,000 loss?
The tax disadvantages of the C corporation form of doing business include "double taxation." What is meant by the term "double taxation" as used in this context?
Jane and Joe plan to go into business together.They plan to incorporate the business.What tax issues should they consider when deciding whether or not to elect S corporation status?
• Are their individual marginal tax rates lower or higher than a C Corporation's marginal tax rates?
• Do they anticipate profits or losses in the first few years of business?
• Will the corporation generate any capital gains or losses?
• Do they plan to withdraw money from the corporation?
• Will they want or need fringe benefits?
• Do they plan to use a calendar year end or a fiscal year end?