What is the purpose of separately stated items

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Question: 1. You should now know that partners in a partnership may not be "employees" of the partnership, but shareholders of a corporation may be employees. Discuss the advantages and disadvantages of making guaranteed payments to partners of a partnership, as opposed to salaries or distributions to shareholders of a c corporation or s corporation.

2. Partnership taxation is very complex. Inside basis, outside basis, capital interest, profits interest, etc. Why is it so important to maintain accurate accounting and reporting of all of these different amounts? And, what is the purpose of separately stated items?

3. Give some examples of the fringe benefit limitations on shareholder-employees of an s corporation. Why do you think these limits are in place?

Textbook is Taxation of Individual and Business Entities by Spilker et al.

Reference no: EM131565144

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