C239 Advanced Tax Concepts| Questions with 100% correct Answers | Verified

Sec. 351 - Transferor recognizes no gain/loss (deferred until sale or exchange) when they transfer property to a corporation solely in exchange for stock if they are in control immediately after transfer Sec. 351 Property - Cash & almost any other assets (AR, Inventory, Equipment) Sec. 351 Property Exclusions - Services exchanged for stock, indebtness not evidenced by security, interest accrued after holding period Sole Proprietorship Advantages - No entity taxation, usually lower tax rate, contribute/withdraw w/out consequence, business loss can offest nonbusiness income Sole Proprietorship Disadvantages - Profits taxed to owner, pays full amount of social security taxes, no group health, must use same accounting period for personal/business Partnership Advantages - Partnership pays no tax, no double taxation, partners can use loses to offset other income, basis increases with share Partnership Disadvantages - Profits are taxed to partners when earned, partner is not considered an employee of partnership C Corporation Advantages - Entity separate and distinct from owners, employed shareholders are employees for tax purposes, shareholder employees entitles to benefits, shareholders can exclude 50% of gain on stock held more than 5 years C Corporation Disadvantages - Double taxation on distributions, shareholders can't withdraw w/out recognizing income, Net Op loss/capital losses have no tax benefits