Disadvantages to sole proprietor
More liability
Self employment tax
Pro to sole proprietor
No double tax
Loss offset personal income
Deduct health insurance
To chose to be treated as a c corp file:
Once elected cannot be changed for
Form 8832
60 months
S corp form and date
1120-S due 15th day of third month
Penalty for not filing K-1 or K-3
330 if intentional 660
S corp & Personal service corps have a
Required tax year which is a calendar year
Partnerships & LLC use tax year of
Majority of owners
Farm land is
Farm equipment is
Farm buildings is
1231
1245
1250
C corps over 30 mil receipts in 3 years
Cannot use cash method
A partnership with a C corp & Tax shelters
Can Not use cash method
Fob destination
Fob shipping
Cod
Owned till delivery over
Owned till off for delivery
Owned until cash swaps in person
Other income includes
Debt forgiveness, state & local refunds, lawsuit awards, some insurance proceeds
Order of deductions
Sec 179
Bonus depreciation
Macrs depreciation
Two depletion methods
Cost & percentage
Max late penalty for corps over 5 mil vs under
Over: 3987000
Under: 1329000
Corp alt min tax
15% of adjusted financial statement income
When electing s corp status use form and must be completed by
2553
No more than 2 months & 15 days from start
In a partnership Basis increase first apply to
Debt basis then stock basis
Order of distributions
AAA (not taxable)
E&P (taxable)
OAA (not taxable)
Stock basis (not taxable)
In excess of stock basis (cap gain)
Penalty if over 60 days late
Smaller of due (.05%) or $510
Guaranteed payments do not
Effect basis
Things you subtract from basis
Decrease in liability
Cash distributions
Separately stated items
Discharge of indebtness
Book income is adjusted by separately stated items, when calculating
Do opposite of normal
What cash basis items are pro rated
Interest
Taxes
Payments for service or use of property
