All the statements above are true, except that the penalty for excess accumulated earnings is 15%, not 20%.
All of the answers are good answers, but there's two key concepts: profitable business and raise capital. A profitable business indicates a need for a separate entity and raise capital indicates that he might want to sell some stock. C-corporation is the best entity for Roger's needs.
S-corporations CAN HAVE a trust as shareholder, less than 75 shareholders, only one class of stock, and they avoid double taxation by paying dividends.
Betty will have taxable dividends from the utility stock (1099-DIV) and unarned income from the S-corp (Schedule K-1). Since she is no longer working, she would not receive any W-2.
General partners have unlimited liability. Partnerships are dissolved at the death, bankruptcy or incapacity of a partner. Partnerships must file a tax return Form 1065, but it is for information purposes only.
80% exclusion if ownership in the dividend paying firm is between 20-80%
TaxesBusiness partners need the information on this form to complete their own tax returns. Here are the details.
TaxesSchedule K-1 is a U.S. tax document used to report income, losses and dividends.
Small BusinessLearn the differences between the types of business organizations so you can determine how to best structure your business for tax and liability limitations.
Small BusinessA partnership is an organization where two or more owners operate a business.
InsightsLLPs are a flexible legal and tax entity that allows partners to benefit from economies of scale by working together while also reducing their liability for the actions of other partners.
Financial AdvisorMLPs are a different animal when it comes to taxes. Here's how they work.
TradingCould incorporating your business help protect it? Find out here.
TaxesDouble taxation refers to income taxes being imposed twice on the same source of earned income.
TaxesLearn how dividends are taxed by the IRS, and understand the different types of dividend income as well as the capital gains tax rates.
Small BusinessLimited partnerships and master limited partnerships have one difference that makes all the difference.