I:16-1 William Bonney and Pat Garrett incorporate Sales, Inc. on January 1, of the current year, under the laws of the State of Florida.

a. How should the new corporation be regarded under the check-the-box rules?

b. Are any entity elections available for Sales, Inc.

under the IRC or the check-the-box rules?

c. How would your answers to Parts a and b change (if at all) should William Bonney be the sole shareholder of Sales, Inc.?

I:16-2 Under the present tax system, C corporation income is taxed twice, once when earned and again when the shareholders receive dividends or sell their stock. Nevertheless, the C corporation form is widely used in the United States, especially for large enterprises. Why would an entrepreneur choose C corporation status instead of one of the flow-through entity forms?