Write a memorandum to bob explaining the tax consequences

Reference no: EM13126566

Bob Jones has a small repair shop that he has run for several years as a sole proprietorship. The proprietorship uses the cash method of accounting and the calendar year as its tax year. Bob needs additional capital for expansion and knows two people who might be interested in investing in the business. One would like to work for the business. The other would only invest.

Bob wants to know the tax consequences of incorporating the business. His business assets include a building equipment, accounts receivable, and cash. Liabilities include a mortgage on the building and a few accounts payable, which are deductible when paid. Assume that Bob's ordinary tax rate is greater than 25%.

Write a memorandum to Bob explaining the tax consequences of the incorporation. As part of your memorandum examine the possibility of having the corporation issue common and preferred stock and debt for the shareholder's property and money.

Reference no: EM13126566

Questions Cloud

Estimate current mean income : Figure out the necessary sample size to reduce sampling error to plus or minus $500. Do you need to have an estimate of the current mean income to answer this question? why or why not?

How much heat energy in calories is needed : how much heat energy in calories is needed to raise the temperture 10.0g of water 6.0C

Calculate the partial pressure of the gases : A mixture of gases contains 0.290 mol CH4, 0.250 mol C2H6, and 0.270 mol C3H8. The total pressure is 1.60 atm. Calculate the partial pressure of the gases.

Describe costing methods for inventory control : Describe costing methods for inventory control, denominator-level capacity concepts and cost capacity analysis?

Write a memorandum to bob explaining the tax consequences : Write a memorandum to Bob explaining the tax consequences of the incorporation. As part of your memorandum examine the possibility of having the corporation issue common and preferred stock and debt for the shareholder's property and money.

Find mean-median and range for two data sets : Find the mean, median, and range for each of the two data sets.Find the mean, median, and range for each of the two data sets.

Calculate the indirect production cost allocated : Calculate the indirect production cost allocated to each product with the ABC system. Suppose all indirect production cost had been allocated.

Prepare the companys stockholders equity section : Melcher, Inc., originally sold 100,000 shares of its $10 par value common stock at $25 per share. Several years later the company repurchased 10,000 of these shares at $55 per share. Melcher currently holds those shares in treasury. Prepare the co..

Amount of the lessee liability to lessor : What is the amount of the lessee's liability to the lessor after the December 31, 2012 payment? (Rounded to the nearest dollar.)

User Account

All Pages