One of the biggest tax mistakes made by businesses involves the selection of an inappropriate entity type or not properly handling the rules that apply to allow certain structures to be formed tax free. Should a client be a corporate tax entity? Is it possible that they might qualify for a tax free exit under Section 1202 so that a C corporation makes sense? Maybe an S election is better? Or is this all wrong, and is a tax partnership structure far more appropriate? This course will help participants understand both how to advise clients to select a proper entity and how to structure the formation to reduce or totally eliminate immediate taxation.
Participants will be able to: • Explain the advantages and disadvantages of various business structures Major Subjects:
• Recognize new businesses that could be formed to allow a tax free exit via Section 1202
• Properly report the transactions related to business formations on tax returns
• The types of business entities that the Internal Revenue Code knows about • The special case of the limited liability company (LLC) and applying the check-the-box regulations Level of Difficulty:
• Advantages and disadvantages of the various entity types
• Tax free incorporation under IRC Section 351 and what can turn the formation into a taxable event
• Tax free formation of a partnership under Section 721 and the special related problems found in Section 704(c) with regard to any unrecognized gain/loss
• Business types qualified for Section 1202 treatment as a C corporation and the benefits conferred on such entities
CPAs, accountants, and financial professionals who advise clients that start new business ventures.