Assignment : Partnership vs. Corporation
Worth 180 points on the topic Partnership vs. Corporation
Using Internet websites such as https://www.irs.gov/ or other similar resources related to partnerships and corporate taxation, write a four to five (4-5) page paper in which you do the following:
Compare and contrast the tax rules and treatment applicable to corporations and partnerships. Indicate the major way in which the tax treatment affects the shareholders or partners.
Explain at least two (2) reasons why a business owner might opt to become a partnership over a corporation. Provide support for your rationale.
Imagine that you are a consultant and make the recommendation that the most advantageous business structure is a C-corporation. Justify why you would recommend a Corporation over a Partnership. Indicate tax rules that influenced your decision.
Analyze what a business owner must consider when deciding what type of entity is best for the goals and vision of the business. Provide at least two (2) examples of research the owner must perform to ensure the proper election is made. Provide support for your rationale.
Use at least two (2) quality academic resources in this assignment. Note: Wikipedia and other websites do not qualify as academic resources.
Your assignment must follow these formatting requirements:
Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; citations and references must follow APA or school-specific format. Check with your professor for any additional instructions. Note: Please refer to the APA template in the course shell for more information on APA style.
Include a cover page containing the title of the assignment, the student’s name, the professor’s name, the course title, and the date. The cover page and the reference page are not included in the required assignment page length.
The specific course learning outcomes associated with this assignment are:
Examine the tax rules that are unique to corporations, and the basic concerns relevant to shareholders and the corporation.
Examine the tax rules and treatment related to partnerships.
Use technology and information resources to research issues in corporate federal taxation.
Write clearly and concisely about corporate federal taxation using proper writing mechanics.
Grading for this assignment will be based on answer quality, logic / organization of the paper, and language and writing skills, using the following rubric.
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Accounting: Partnership vs. Corporation
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Tax Rules and Treatment Applicable to Corporation and Partnership
The formation of a corporation occurs with the filling of a certificate of birth with the secretary of state under the article of incorporation (Emanuel, 2009). The process gives a legal means through with such a company can operate. The subchapter “C” of the tax code considers all corporations to be C-corps., unless otherwise categorized as an S-corp. With partnerships, their formation occurs when two or more individuals form a business operation with the purpose of sharing management roles and profits.
In regards with tax rules, corporations and partnerships are subject to corporation and partnership tax rules respectively (Law, 2015). The corporation is a legal entity, which is separate from its owners for the purpose of taxation. The shareholders in a corporation are not subject to self-employment taxes. A corporation will always pay income tax on the profits earned, while in partnership, the shareholders are not responsible for the payment of tax from the profits that the business makes. This is because partnership is not a separate legal entity and does not have to pay taxes in itself.
There are different tax laws to which partnerships and corporations must comply. The corporations under the tax rules are taxed at different levels compared to other business entities. A corporation is required to file tax returns under the Form 1120 in addition to paying taxes on profits at the predetermined corporate income tax rates.
How the Corporation Tax Rule may affect Shareholders There shareholders of a corporation are affected because a C corporation is taxed twice in a year based on its net income. The corporation is taxed on its profits and then the shareholder profits in form of dividend distributions creating an element………………………………………………………..Partnership vs. Corporation………………………………………………………………………………………………………………………………………….
