Advantages of debt versus equity capital formation

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Imagine that you are a Certified Public Accountant (CPA) with a new client who needs an opinion on themost advantageous capital structure of a new corporation. Your client formed the corporation in questionto provide technology to the medical profession to facilitate compliance with the Health InsurancePortability and Accountability Act (HIPAA). Your client is very excited because of the ability to secureseveral significant contracts with sufficient capital.Use the Internet and Strayer databases to research the advantages and disadvantages of debt for capitalformation versus equity for capital formation of a corporation.

1. Compare the tax advantages of debt versus equity capital formation of the corporation for theclient.

2. Recommend to the client whether he / she should use debt or equity for capital formation of the new corporation, based on your research. Provide a rationale for the response.

3. Use the six (6) step tax research process, located in Chapter 1 and demonstrated in Appendix Aof the textbook, to record your research for communications to the client.

Reference no: EM13506256

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