What are the tax issues involved in making this determination

MBA 7295

Chapters 2 & 3 Discussion

 

1)

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?

 

 

 

2)

Newco Corporation has asked you to help determine whether it

should use the accrual method or the cash

method of accounting. What are the tax issues involved in making

this determination?

 

 

3)

Discuss the estimated tax filing requirements for a C corporation.