Nan wants to incorporate her sole proprietorship and will transfer cash of $5,000 and property with a fair market value of $60,000 and a basis of $20,000 The corporation will assume the $55,000 mortgage on the property Nan will be paid a salary of $40,000 She has been advised by her cousin that she...

First the advice that Nans cousin gave her is partially correct The tax rate for a corporation is less at lower levels of income than it is for a sing ...

Nan wants to incorporate her sole proprietorship and will transfer cash of $5,000 and property with a

Question:

Nan wants to incorporate her sole proprietorship and will transfer cash of $5,000 and property with a fair market value of $60,000 and a basis of $20,000. The will assume the $55,000 mortgage on the property. Nan will be paid a salary of $40,000. She has been advised by her cousin that she might want to be a for tax purposes because its income is taxed at a lower rate and her salary can be deducted as a business expense to lower overall taxes. However, she recently read an article in a small business owners’ journal extolling the virtues of using an S Discuss the income tax consequences for Nan if she structures her business as an S versus a Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...