f
Color key SUPORT AEIOU MY LEGS DIC PICS
R1
Previously deducted items included in Schedule K components, separately stated and not in corp's
R2 Criteria for qualifying relative dependent modified AGI Contract types that must be in writing (statute of frauds)
S - SUPPORT test (more than half support) M - MARRIAGE ordinary income
R3 A - ADOPTION exclusion D - DIVIDENDS
U - UNDER gross income limitation $5050 (2024) E - EE bonds income Y - cannot be performed within one YEAR
R4 P - PRECLUDES dependent filing a joint return L - LAND I - INTEREST INCOME
I - IRA deductions C - CHARITY
O - ONLY US citizens & NA residents O - OUT of US income E - EXECUTORS or similar reps
R5 P- PARTNER "stuff" (health premie & guaranteed pymt)
R - RELATIVE (OR) U - UNIVERSITY student loan G - GOODS costing $500+
R6 T - nonrelative TAXPAYER living with individual entire year S - acting as SURETY I - INVESTMENT income
C - CASUALTY/loss/theft ($100 per event + 10% floor)
S - SECTION 179 depreciation exp
CARES
HIMDEADTED DUMIS
Criteria for qualifying child dependent
C - CLOSE relative (son, daughter, BASE
Early IRA withdrawal penalty tax (10%) exceptions adopted, descendent, etc)
H - HOMEBUYER first time A - AGE limit (under 19 or 24 for fulltime Contract potential defenses summary Shareholder's S corp stock basis
I - INSURANCE medical if unemployed 12 consecutive weeks student D - DURESS B - BEGINNING basis
M - MEDICAL exp in excess of % AGI floor R - RESIDENCY/filing reqs U - UNDUE influence A - ADD (income, contribution)
D - DISABILITY not temporary E - ELIMINATE gross income test M - MUTUAL mistake or misrepresentation S - SUBTRACT (distribution, loss)
E - EDUCATION S - SUPPORT test I - INTOXICATED E - ENDING balance
A - ADOPTION/bird of child within one year of birth S - STATUTE of frauds or limitations
D - DISASTER/DEATH
T - TERMINAL illness of death of account owner WRaP NIRD
E - EMERGENCY expense up to $1000 per year
D - DOMESTIC abuse victims (lesser $10k or 50% of retirement) Nondeductible loss types 60% of adjusted ordinary income for personal holding
W - WASH sales SWAP
company must come from (C-Corp taxation):
R - RELATED party transactions N - NET rent (if less than 50% of ordinary gross income)
FACEE and I - taxable INTEREST
P - PERSONAL losses Exception to contracts of $500+ for goods that don't have to be in
R - ROYALTIES or
writing to be enforceable
D - DIVIDENDS
Refundable credits S - SPECIALLY manufactured goods
F - FEDERAL income tax withheld W - merchant sends another WRITTEN confirmation of contract
A - AMERICAN opportunity credit 40% refundable RISE A - ADMITTANCE in court
C - CHILD tax credit P - PERFORMED contracts to extent performance has been ADS Rules
E - EARNED income credit Common law pertains to contracts accepted
E - EXCESS social security tax paid involving Circular 230 addresses following
R - REAL estate A - AUTHORITY to practice before IRS
I - INSURANCE D - DUTIES and restrictions relating to practice
S - SERVICES S - SANCTIONS for violations
SHIT IM ASS DOPE BID LID
E - EMPLOYMENT RULES applicable to disclinary hearings
Adjustments above the line Automatic termination of actual and apparently agent authority
S - STUDENT loan interest lim to $2500 by operation of law
H - HEALTH savings account HSA DIDI MAIDS
B - principal BANKRUPTCY
I - IRA I - principal INCAPACITY
T - TUITION and fees Contracts can be terminated through D - DEATH of either principal or agent
I - INTEREST withdrawal penalty operation of law: L - failure to acquire necessary LICENSE 5 elements of fraud
M - MOVING exp for armed forces D - DEATH/incapacity I - subsequent ILLEGALITY M - MISREPRESENTATION of material fact
A - ALIMONY paid I - INCOMPETENCY D - DESTRUCTION of subject matter A - ACTUAL and justifiable reliance by plaintiff
S - SELF employed health insurance D - DESTROYED I - intent to INDUCE plaintiff's reliance
S - SELF employed retirement I - ILLEGALITY D - DAMAGES
D - DOMESTIC production activity deduction S - SCIENTER (intent to deceive)
O - ONE half self employment FICA SCRIP
P - PAID attorney fees
DA PIE
E - EDUCATOR expenses lim to $300
etc.
Makes contract VOID Surety defenses
D - DESTRUCTION of subject matter S - SURETY lacks capacity/bankrupt s(orry!)stbs don't get deduction if above the limit
CIT MMC! A - ADJUDICATED incompetency C - CREDITOR act in bad faith or consideration not given "ribs" (7) need "bibs (11)
P - PHYSICAL duress R - RISK is varied "attach" your "security" to the hip to be safe
Itemized deductions below line I - ILLEGALITY I - ILLEGAL debt
C - CHARITY E - fraud in EXECUTION P - PAYMENT already made or tendered to be paid by debtor Filing statement, perFect double s
I - INTEREST
T - TAXES (state, local, foreign)
M - MEDICAL exp (don't forget floor 7.5%)
M - MISC (gambling) COAXL
C - CASUALTY/theft ($100 per EVENT + 10% floor) RIBS
Contract elements summary
C - CAPACITY (competent, adult)
WE ACE O - OFFER Following cannot file for ch 7 bankruptcy (liquidation)
A - ACCEPTANCE R - RAILROADS
Refundable credits X - EXCHANGE consideration I - INSURANCE companies/small investment companies
W - WITHHELD taxes L - LEGAL B - BANKS
E - EARNED income credits S - SAVINGS institutions
A - AMERICAN opportunity
C - CHILD care credit
LORA
E - EXCESS social security paid
BIBS
Implied duties agent owes principal
L - duty of LOYALTY Following cannot file for ch 11 bankruptcy (reorganization)
O - duty of OBEDIENCE B - BROKERS
R - duty of REASONABLE care I - INSURANCE companies/small investment companies
A - duty to ACCOUNT B - BANKS
S - SAVINGS institutions
I C FRAUD
WAFTED
Reasons court pierce corporate veil (hold Nondischargeable debts
limited owner personally liable) W - WILLFUL & malicious injury
I - INADEQUATE capitalization A - ALIMONY
C - COMINGLING personal with F - FRAUD + FINES/penalties owed to government
corporate funds T - TAXES due within past 3 years
FRAUD commited against existing E - EDUCATIONAL loans
creditors D - DEBTS undisclosed in bankruptcy petition
SAG WE CTI
IBM
Priority claimants order in liquidation after Secured Claimants
Order of depreciation deduction S - SUPPORT obligations to spouses and children
I - Section 179 deduction A - ADMINISTRATION expenses of bankruptcy
B - BONUS depreciation G - GAP claims
M - MACRS depreciation W - WAGE claims of employees
E - EMPLOYEE benefits
G - GRAIN farmers and fishermen
C - CONSUMER deposits
T - TAX claims
I - INJURY claims from intoxicated driving
DAMS
Fundamental changes that require shareholder approval in C Corp
D - DISSOLUTION
A - AMENDMENTS to articles of incorporation
M - MERGER, consolidation, compulstory share exchange
S - SALE of substantially all corporation's assets
, Entity Sole proprietorship General partnership/joint venture Limited liability partnership (LLP) Limited Partnership Limited liability company (LLC) Corporation (C-corp) Subchapter S Corp
Combines limited liability of corp with
GP: Two/more individuals come together
Combines partnership and corporate Combines partnership and corporation taxation of partnership/sole
Business owned/operated by to co-own/operate business venture with Legal entity separate and distinct from Type of corporation, was a C corp that
Description features, all partners have limited features, at least one general partner and proprietorship
single individual intent to make profit owners elects to be S corp
liabilities one/more limited partners Members can be individual, corp, other
JV: Formation for specific single purpose
LLCs, foreign entities
Formalities, file articles of incorporation
Formalities, file articles of organization
or corporate charter with state
with state
Must include:
Formalities, file statement of qualification Includes:
No formalities, form with written - name of corp
with state - Statement that entity is LLC
No formalities owner simply agreement or mere conduct (easy to Formalities, file certificate of limited - name/address of corp registration
Formation Certificate of LLP includes name, location - name of LLC and indication it's LLC Formalities, same as corp + "S" election
operates business form) partnership with state - name/address of each incorporator
of registered office, # of partners, - address of registered office & agent
Any entity can be a partner - type/# of shares to be issued
description of business name
NOT mandatory:
- if mgmt is vested in managers
- type of business and purpose
- names of persons who will manage
- where offices located
Tax form schedule C Form 1065 1120 1120S
Generally use same taxable year used by
Any taxable year can be adopted Generally calendar year but different
Taxable year more than 50% of partners, only different
Calendar year Personal service corporation: must adopt permitted only if there's a substantial
options one permitted if substantial business
calendar year business purpose
purpose
Unlimited personal liability all
Partners generally not liable for
business obligations. Can come Unlimited personal liability all partnership General: unlimited personal liability Members generally not personally liable Shareholders generally not liable beyond Shareholders generally not liable beyond
Owner liability partnership obligations unless own
after you personally and your obligations Limited: only investment at risk beyond own investment own investment own investment
negligence
personal assets
Sole proprietor manage directly Owners manage directly or can agree to Partners manage directly or can agree to General: exclusive managers Members manage directly or can agree to Managed by Board of Directors that Managed by Board of Directors that
Management
or can appoint manager appoint manager partner appoint managing partner Limited: ordinarily do not manage appoint manager appoints officers to run day-to-day appoints officers to run day-to-day
Shareholders free to transfer ownership Shareholders generally may transfer
Absent agreement otherwise, members
Sole proprietor can sell business Partners cannot transfer ownership Partners cannot transfer ownership Partners cannot transfer ownership unless they agree otherwise ownership unless they agree otherwise,
Transferability cannot transfer ownership interest
at will without unanimous consent without unanimous consent without unanimous consent Corporation only is liable for corporate but cannot transfer to foreign entity
without unanimous consent
obligations shareholders
Double taxation (special to C corp)
Flow through Flow through Flow through Flow through Flow through. Not taxed on income
Flow through 1. Corp - income
Taxation default Self employment tax on share of profit, But partners not managing have passive But limited partners have passive loss But members not managing have passive But shareholders not managing have
Subject to self employment tax 2. Shareholders - when dividends are
guaranteed payment loss restrictions restrictions loss restrictions passive loss restrictions
distributed
Methods: 1. Voluntary dissolution through
Dissolution by: Limited duration Board vote
Mutual agreement Methods: Member withdrawal Shareholder approval
Court judgement Unanimous written consent Passage of time Filing
Termination Upon death Partner actions Court judgement (judicial decree) Unanimous decision 2. Involuntary dissolution through
Expiration of term Completion of time period Bankruptcy Quo-warranto action
Illegality Withdrawal of only general partner Failure to comply with state reqs Shareholder action when there's:
Insolvency Member death unless members consent misconduct, deadlock, or business not
to continue advantageous
- Shareholder must be individual (US
- GP partnership should be in writing if - C corp cannot own shares in an S corp "C citizen or resident), estate, trust, qualified
longer than a year no S" profit sharing plan
- Simplest form of business - Absent agreement, equal rights to share - Shareholders have right to vote and can - Corporate, partnership, non-qualified
ownership P/L - Ability to be taxed like partnership approve fundamental changes to trusts, IRAs cannot be shareholders
- Benefits: want to form business - Unless noted not entitled for - Voting strength proportional to corporation - Must be domestic corporation
you manage, want to claim compensation for services contributions - Piercing the corporate veil = disregard - 100 shareholders max
- Absent agreement, split based on value
Extra income/loss on taxes, do not - No taxation on property contributions - Similar to GP including sharing of P/L - P/L split based on value of partner corporate entity "ICF" - No more than out class of stock
of partner contributions
want to bother with formality, - No tax on distributions to partner contributions I - INADEQUATE capitalization outstanding
can deduct business losses (moving property in and out) - LLC with more than one owner is treated C - CONMINGLING personal with - Preferred stock not allowed
- You and sole propriership are - no gain is recognized on distribution of as partnership corporate fund - Can own shares of C corp
one and the same partnership to partner except to extent F - FRAUD - Cannot file consolidated tax return with
that money distributed exceed adjusted - Unlimited legal life c corp
basis of partner interest - Losses not deductible to owners - S corp is a more "strict" c-corp think of it
that way!
S corps make DISTRIBUTIONS. If you have tax basis, then distribution reduces basis and is non-taxable. You already paid tax on the money you put into the s-corp so getting it back is a nontaxable event up to $100k
C corps issue DIVIDENDS from their earnings and profit (E&P) account. dividends do not change shareholder's basis and are preferentially taxed. C corp is giving you new money, not money you gave them to buy your shares
Color key SUPORT AEIOU MY LEGS DIC PICS
R1
Previously deducted items included in Schedule K components, separately stated and not in corp's
R2 Criteria for qualifying relative dependent modified AGI Contract types that must be in writing (statute of frauds)
S - SUPPORT test (more than half support) M - MARRIAGE ordinary income
R3 A - ADOPTION exclusion D - DIVIDENDS
U - UNDER gross income limitation $5050 (2024) E - EE bonds income Y - cannot be performed within one YEAR
R4 P - PRECLUDES dependent filing a joint return L - LAND I - INTEREST INCOME
I - IRA deductions C - CHARITY
O - ONLY US citizens & NA residents O - OUT of US income E - EXECUTORS or similar reps
R5 P- PARTNER "stuff" (health premie & guaranteed pymt)
R - RELATIVE (OR) U - UNIVERSITY student loan G - GOODS costing $500+
R6 T - nonrelative TAXPAYER living with individual entire year S - acting as SURETY I - INVESTMENT income
C - CASUALTY/loss/theft ($100 per event + 10% floor)
S - SECTION 179 depreciation exp
CARES
HIMDEADTED DUMIS
Criteria for qualifying child dependent
C - CLOSE relative (son, daughter, BASE
Early IRA withdrawal penalty tax (10%) exceptions adopted, descendent, etc)
H - HOMEBUYER first time A - AGE limit (under 19 or 24 for fulltime Contract potential defenses summary Shareholder's S corp stock basis
I - INSURANCE medical if unemployed 12 consecutive weeks student D - DURESS B - BEGINNING basis
M - MEDICAL exp in excess of % AGI floor R - RESIDENCY/filing reqs U - UNDUE influence A - ADD (income, contribution)
D - DISABILITY not temporary E - ELIMINATE gross income test M - MUTUAL mistake or misrepresentation S - SUBTRACT (distribution, loss)
E - EDUCATION S - SUPPORT test I - INTOXICATED E - ENDING balance
A - ADOPTION/bird of child within one year of birth S - STATUTE of frauds or limitations
D - DISASTER/DEATH
T - TERMINAL illness of death of account owner WRaP NIRD
E - EMERGENCY expense up to $1000 per year
D - DOMESTIC abuse victims (lesser $10k or 50% of retirement) Nondeductible loss types 60% of adjusted ordinary income for personal holding
W - WASH sales SWAP
company must come from (C-Corp taxation):
R - RELATED party transactions N - NET rent (if less than 50% of ordinary gross income)
FACEE and I - taxable INTEREST
P - PERSONAL losses Exception to contracts of $500+ for goods that don't have to be in
R - ROYALTIES or
writing to be enforceable
D - DIVIDENDS
Refundable credits S - SPECIALLY manufactured goods
F - FEDERAL income tax withheld W - merchant sends another WRITTEN confirmation of contract
A - AMERICAN opportunity credit 40% refundable RISE A - ADMITTANCE in court
C - CHILD tax credit P - PERFORMED contracts to extent performance has been ADS Rules
E - EARNED income credit Common law pertains to contracts accepted
E - EXCESS social security tax paid involving Circular 230 addresses following
R - REAL estate A - AUTHORITY to practice before IRS
I - INSURANCE D - DUTIES and restrictions relating to practice
S - SERVICES S - SANCTIONS for violations
SHIT IM ASS DOPE BID LID
E - EMPLOYMENT RULES applicable to disclinary hearings
Adjustments above the line Automatic termination of actual and apparently agent authority
S - STUDENT loan interest lim to $2500 by operation of law
H - HEALTH savings account HSA DIDI MAIDS
B - principal BANKRUPTCY
I - IRA I - principal INCAPACITY
T - TUITION and fees Contracts can be terminated through D - DEATH of either principal or agent
I - INTEREST withdrawal penalty operation of law: L - failure to acquire necessary LICENSE 5 elements of fraud
M - MOVING exp for armed forces D - DEATH/incapacity I - subsequent ILLEGALITY M - MISREPRESENTATION of material fact
A - ALIMONY paid I - INCOMPETENCY D - DESTRUCTION of subject matter A - ACTUAL and justifiable reliance by plaintiff
S - SELF employed health insurance D - DESTROYED I - intent to INDUCE plaintiff's reliance
S - SELF employed retirement I - ILLEGALITY D - DAMAGES
D - DOMESTIC production activity deduction S - SCIENTER (intent to deceive)
O - ONE half self employment FICA SCRIP
P - PAID attorney fees
DA PIE
E - EDUCATOR expenses lim to $300
etc.
Makes contract VOID Surety defenses
D - DESTRUCTION of subject matter S - SURETY lacks capacity/bankrupt s(orry!)stbs don't get deduction if above the limit
CIT MMC! A - ADJUDICATED incompetency C - CREDITOR act in bad faith or consideration not given "ribs" (7) need "bibs (11)
P - PHYSICAL duress R - RISK is varied "attach" your "security" to the hip to be safe
Itemized deductions below line I - ILLEGALITY I - ILLEGAL debt
C - CHARITY E - fraud in EXECUTION P - PAYMENT already made or tendered to be paid by debtor Filing statement, perFect double s
I - INTEREST
T - TAXES (state, local, foreign)
M - MEDICAL exp (don't forget floor 7.5%)
M - MISC (gambling) COAXL
C - CASUALTY/theft ($100 per EVENT + 10% floor) RIBS
Contract elements summary
C - CAPACITY (competent, adult)
WE ACE O - OFFER Following cannot file for ch 7 bankruptcy (liquidation)
A - ACCEPTANCE R - RAILROADS
Refundable credits X - EXCHANGE consideration I - INSURANCE companies/small investment companies
W - WITHHELD taxes L - LEGAL B - BANKS
E - EARNED income credits S - SAVINGS institutions
A - AMERICAN opportunity
C - CHILD care credit
LORA
E - EXCESS social security paid
BIBS
Implied duties agent owes principal
L - duty of LOYALTY Following cannot file for ch 11 bankruptcy (reorganization)
O - duty of OBEDIENCE B - BROKERS
R - duty of REASONABLE care I - INSURANCE companies/small investment companies
A - duty to ACCOUNT B - BANKS
S - SAVINGS institutions
I C FRAUD
WAFTED
Reasons court pierce corporate veil (hold Nondischargeable debts
limited owner personally liable) W - WILLFUL & malicious injury
I - INADEQUATE capitalization A - ALIMONY
C - COMINGLING personal with F - FRAUD + FINES/penalties owed to government
corporate funds T - TAXES due within past 3 years
FRAUD commited against existing E - EDUCATIONAL loans
creditors D - DEBTS undisclosed in bankruptcy petition
SAG WE CTI
IBM
Priority claimants order in liquidation after Secured Claimants
Order of depreciation deduction S - SUPPORT obligations to spouses and children
I - Section 179 deduction A - ADMINISTRATION expenses of bankruptcy
B - BONUS depreciation G - GAP claims
M - MACRS depreciation W - WAGE claims of employees
E - EMPLOYEE benefits
G - GRAIN farmers and fishermen
C - CONSUMER deposits
T - TAX claims
I - INJURY claims from intoxicated driving
DAMS
Fundamental changes that require shareholder approval in C Corp
D - DISSOLUTION
A - AMENDMENTS to articles of incorporation
M - MERGER, consolidation, compulstory share exchange
S - SALE of substantially all corporation's assets
, Entity Sole proprietorship General partnership/joint venture Limited liability partnership (LLP) Limited Partnership Limited liability company (LLC) Corporation (C-corp) Subchapter S Corp
Combines limited liability of corp with
GP: Two/more individuals come together
Combines partnership and corporate Combines partnership and corporation taxation of partnership/sole
Business owned/operated by to co-own/operate business venture with Legal entity separate and distinct from Type of corporation, was a C corp that
Description features, all partners have limited features, at least one general partner and proprietorship
single individual intent to make profit owners elects to be S corp
liabilities one/more limited partners Members can be individual, corp, other
JV: Formation for specific single purpose
LLCs, foreign entities
Formalities, file articles of incorporation
Formalities, file articles of organization
or corporate charter with state
with state
Must include:
Formalities, file statement of qualification Includes:
No formalities, form with written - name of corp
with state - Statement that entity is LLC
No formalities owner simply agreement or mere conduct (easy to Formalities, file certificate of limited - name/address of corp registration
Formation Certificate of LLP includes name, location - name of LLC and indication it's LLC Formalities, same as corp + "S" election
operates business form) partnership with state - name/address of each incorporator
of registered office, # of partners, - address of registered office & agent
Any entity can be a partner - type/# of shares to be issued
description of business name
NOT mandatory:
- if mgmt is vested in managers
- type of business and purpose
- names of persons who will manage
- where offices located
Tax form schedule C Form 1065 1120 1120S
Generally use same taxable year used by
Any taxable year can be adopted Generally calendar year but different
Taxable year more than 50% of partners, only different
Calendar year Personal service corporation: must adopt permitted only if there's a substantial
options one permitted if substantial business
calendar year business purpose
purpose
Unlimited personal liability all
Partners generally not liable for
business obligations. Can come Unlimited personal liability all partnership General: unlimited personal liability Members generally not personally liable Shareholders generally not liable beyond Shareholders generally not liable beyond
Owner liability partnership obligations unless own
after you personally and your obligations Limited: only investment at risk beyond own investment own investment own investment
negligence
personal assets
Sole proprietor manage directly Owners manage directly or can agree to Partners manage directly or can agree to General: exclusive managers Members manage directly or can agree to Managed by Board of Directors that Managed by Board of Directors that
Management
or can appoint manager appoint manager partner appoint managing partner Limited: ordinarily do not manage appoint manager appoints officers to run day-to-day appoints officers to run day-to-day
Shareholders free to transfer ownership Shareholders generally may transfer
Absent agreement otherwise, members
Sole proprietor can sell business Partners cannot transfer ownership Partners cannot transfer ownership Partners cannot transfer ownership unless they agree otherwise ownership unless they agree otherwise,
Transferability cannot transfer ownership interest
at will without unanimous consent without unanimous consent without unanimous consent Corporation only is liable for corporate but cannot transfer to foreign entity
without unanimous consent
obligations shareholders
Double taxation (special to C corp)
Flow through Flow through Flow through Flow through Flow through. Not taxed on income
Flow through 1. Corp - income
Taxation default Self employment tax on share of profit, But partners not managing have passive But limited partners have passive loss But members not managing have passive But shareholders not managing have
Subject to self employment tax 2. Shareholders - when dividends are
guaranteed payment loss restrictions restrictions loss restrictions passive loss restrictions
distributed
Methods: 1. Voluntary dissolution through
Dissolution by: Limited duration Board vote
Mutual agreement Methods: Member withdrawal Shareholder approval
Court judgement Unanimous written consent Passage of time Filing
Termination Upon death Partner actions Court judgement (judicial decree) Unanimous decision 2. Involuntary dissolution through
Expiration of term Completion of time period Bankruptcy Quo-warranto action
Illegality Withdrawal of only general partner Failure to comply with state reqs Shareholder action when there's:
Insolvency Member death unless members consent misconduct, deadlock, or business not
to continue advantageous
- Shareholder must be individual (US
- GP partnership should be in writing if - C corp cannot own shares in an S corp "C citizen or resident), estate, trust, qualified
longer than a year no S" profit sharing plan
- Simplest form of business - Absent agreement, equal rights to share - Shareholders have right to vote and can - Corporate, partnership, non-qualified
ownership P/L - Ability to be taxed like partnership approve fundamental changes to trusts, IRAs cannot be shareholders
- Benefits: want to form business - Unless noted not entitled for - Voting strength proportional to corporation - Must be domestic corporation
you manage, want to claim compensation for services contributions - Piercing the corporate veil = disregard - 100 shareholders max
- Absent agreement, split based on value
Extra income/loss on taxes, do not - No taxation on property contributions - Similar to GP including sharing of P/L - P/L split based on value of partner corporate entity "ICF" - No more than out class of stock
of partner contributions
want to bother with formality, - No tax on distributions to partner contributions I - INADEQUATE capitalization outstanding
can deduct business losses (moving property in and out) - LLC with more than one owner is treated C - CONMINGLING personal with - Preferred stock not allowed
- You and sole propriership are - no gain is recognized on distribution of as partnership corporate fund - Can own shares of C corp
one and the same partnership to partner except to extent F - FRAUD - Cannot file consolidated tax return with
that money distributed exceed adjusted - Unlimited legal life c corp
basis of partner interest - Losses not deductible to owners - S corp is a more "strict" c-corp think of it
that way!
S corps make DISTRIBUTIONS. If you have tax basis, then distribution reduces basis and is non-taxable. You already paid tax on the money you put into the s-corp so getting it back is a nontaxable event up to $100k
C corps issue DIVIDENDS from their earnings and profit (E&P) account. dividends do not change shareholder's basis and are preferentially taxed. C corp is giving you new money, not money you gave them to buy your shares
