Doyle is the owner of 18 laundromats, all of which are in the Tucson, Arizona area. She started the business 20 years ago with one laundromat and has grown it steadily over the ensuing years. She has always operated the business as a sole proprietorship, and the business has been quite profitable. Doyle has recently considered adding one or more partners to her business so that she'd have the capital to expand into the Phoenix area. These plans are currently on hold, but Doyle may pursue them again in the future.

 

Doyle's nephew is a second-year law student at the University of Arizona. He recently told Doyle about his Business Organizations class where he learned, among other things, that from a legal perspective a sole proprietorship is not a good form in which to operate a business (although he can't remember why). Hence, Doyle has come to see you about changing the legal form of her business. Doyle's priorities, in order, are minimizing taxes, minimizing legal and filing fees, and being attractive to potential future partners.

 

Under which legal form should Doyle operate her business? Which federal income tax status should she go with for the business?