What is your opinion about incorporating the business going

Assignment Help Taxation

Reference no: EM133354078

Question: Thomas and his wife Diana have operated their children's daycare for the last three years. They also own the daycare facility, a building, and the adjacent land on 1322 Glades Road. They have limited working capital but do not foresee the need to make additional capital improvements soon. Their total business assets are about $250,000 with a $120,000 mortgage on the building as their only liability. In recent years they have not kept exact records, but have been able to withdraw any unneeded assets at the end of the year, which totaled approximately $50,000 in cash in 2022.

In 2022 they reported a net income of $85,000. In addition, Thomas has used his personal car for business travel and has charged the business mileage at the appropriate mileage when he has traveled to Miami for continuing education credits, and Diana has traveled to New York once each year for a trip with girlfriends and to attend a conference on childhood development. Although Thomas and Diana have never been sued, they have started thinking about possible legal liability in recent months.

As a good friend of Thomas and Diana and a CPA, what is your opinion about incorporating the business going forward? List at least two reasons for or against incorporating, and any change the S-corp status would have on their taxable income from the company.

Reference no: EM133354078

Questions Cloud

Auditory information through the ear : Describe the typical process of how you will sense and process this auditory information through the ear.

Prepare morticia and gomez 2021 income tax returns : Prepare Morticia and Gomez's 2021 income tax returns (T1) using the 2021 version of Profile software. See attachments on following pages.

State your opinion for or against the estate tax : Do you believe it is a necessary to generate income for the government? Or do you agree with the heritage foundation that the tax imposes an undue burden

Diversity and inclusion at davidson college : Is setting numbers for business at 30% the right way to address the issue of diversity and inclusion at Davidson college?

What is your opinion about incorporating the business going : what is your opinion about incorporating the business going forward? List at least two reasons for or against incorporating, and any change the S-corp status

What is the provincial tax payable before tax credits : What is the provincial tax payable before tax credits if the individual is a residence of Ontario in 2021 calendar year with the same taxable income of $88,500?

Supervisor noticed coworker burnout is high in your office : Your supervisor noticed coworker burnout is high in your office and there has been a lot of turnover lately.

Who is responsible to pay the income tax on trust income : Who is responsible to pay the income tax on trust income in 2021 and why? Provide an explanation and support your research, explanation and conclusions

Own bodies and desires and intimacies : Discuss RAFIKI (2018) in consideration of Ellerson's (2019) idea of the right of women to have power over their own bodies and desires and intimacies.

User Account

All Pages