Overview: Partnership Taxation and Corporate Taxation
There are rules and regulations for partnerships and their partners in terms of federal taxation. The partnership and the partners will both file tax returns. The partnership will pass-through the income or loss to the partners and the partners will report this income or loss on their taxes depending on their ownership amount in the partnership. Other important tax considerations include the sale of a partner’s interest or adding a new partner. In addition, any property that is distributed from the partnership to the partner(s) should be reported in the same tax year. Partnerships are the most common form of business entities other than corporations. Most businesses will acquire the services of a CPA to understand how the business will or will not impact their own personal taxes.
Corporate taxation involves the tax reporting for C-Corporations and S-Corporations. There are also rules that will cover the life cycle of the corporation in terms of how transactions are reported on the taxes. There are special rules that apply to the deductions and the income from the corporation. Many C-Corporations also have shareholders. The dividends that are distributed to the shareholders are also reported on the shareholders’ tax returns in the form of a K-1. The corporations are responsible for reporting this information to the shareholders and also on their tax returns. Corporations often have different fiscal years from individuals, so most corporations will file an extension with the IRS and file their returns in October. The extension allows them time to close their fiscal year books and file the returns.
As a business consultant, you would like to help your clients understand the different entity formations that they can choose from. For this assignment, you will compare C-Corporations, S-Corporations, and Partnerships. At a minimum, your submission should include the following:
1.Overview of each entity
2.Formation of each entity
3.Operations of each entity
4.Distributions of each entity
5.Tax implications for each entity
Your paper should include a minimum of five scholarly sources.
Length: 5 pages
** please include subtitles.
** I attached articles incorporate how you see fit.
** check grammar and punctuation.
** follow assignment directions accordingly.