What entity types are easiest to form? What are hardest?
Hardest to form an S or C corp, easiest to form a partnership
What entity types give best protection from liability?
S and C corp
What are the requirements for 351 transactions?
80% or more of the corporation needs to be controlled by people contributing CAPITAL, service contributions that are supposed to make up a part of that 80% mess everything up, making contributions taxable to everyone
What are some of the tax concerns when picking a taxable entity type?
do losses flow through, QBI deduction, how easy is it to put property in and take property out of the corporation? How many levels of taxation will income be subject to?
What are the tax concerns specific to converting a business from a C corp to an S corp?
Harder to bring on new investors, cannot go public. If inventory was valued using LIFO you might have to recognize a gain if FIFO valuation increases its value, passive shareholders in the S corp might be subject to the NIIT.
How is self employment tax calculated?
What are the tax cons of converting a C corp to a partnership or LLC?
there’s a deemed liquidation of all the C corp’s assets so if you have appreciated property that’s super bad, tax benefits like NOLs will be lost unless used in the final year of the C corp’s tax life (only 80% if they originated after 2018), C corp owners who were actively involved will now have to pay self employment tax (if they remain actively involved)
