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Question:
Sarah plans to invest $1 million in a business venture that will last five years. She is debating whether to operate the business as a C corp or a sole proprietorship. If a C corp, she can liquidate the corporation at the end of the five-year period. She expects the business to prepare taxable income as follows:
year 1: 40,000, year 2: 70,000, year 3: 90,000, year 4: 150,000, year 5: 350,000.
If incurred in corporate form, these taxable income amounts will be subject to the corporate tax rate schedule. If in proprietorship form, they can be subject to Sarah's 35% marginal tax rate. Consider that any capital gain upon corporate liquidation will be taxed at a 23.8% capital gains rate (including the 3.8% net investment tax rate) and that sec. 1202 does not apply.
Required:
Evaluate the after-tax amount Sarah will have at the end of five years under each alternative. Which alternative do you recommend?
At the end of 2013, the temporary difference is $70 million. Payne has no other temporary differences and no valuation allowance for the deferred tax asset. Taxable income for 2013 is $180 million and the tax rate is 40%.
Identify three areas to support the above statement and discuss how these areas would benefit a country in trade and commerce.
George Judson is the sole shareholder and employee of Black Corporation, a C corporation that is engaged exclusively in engineering services. During the year.
Calculate the capital gain under the indexation method and calculate the capital gain under the 50% discount method.
The corporation also borrowed $250,000 from ACME Venture Capital to finance operating costs and capital expenditures - first few years of operation and the corporation sustained chronic losses
Assuming that the loan is repaid in 2013 and Marc has always made his interest payments on time, what will be the tax consequences of this loan?
What are the U.S. tax consequences of liquidation for Winco and what is the maximum amount of income that Acme can allocate to its IC-DISC? (Assume combined taxable income equals the $400 of net income from qualifi ed export receipts.)
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Wu has carried on a business of manufacturing toys in Hong Kong for many years. The business closes its accounts to 31 December each year. The tax written down values of plant and machinery - hong kong taxation
Impact of present-year section 179 expense deduction for previous item in succeeding year
Determine Emily's itemized deductions. Which of these items can and cannot be listed as medical deductions? What is her 2011 taxable income?
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