Facts: Dr. Moore is a chiropractor who is the only shareholder of Moore Spine Center, Inc., an S corporation. The corporation offers Moore's services to his own patients. He also has 5 employees working for him. Moore does not receive any regular payments from the corporation as compensation, but he withdraws funds as the need arises. During the current year, he withdrew $200,000, and the net income of the corporation is $325,000. The corporation does not deduct the $200,000, nor does Moore include it in gross income. Moore does, however, report the $325,000 in gross income on his Schedule E from the K-1 received from the S Corporation prepared by his CPA. Because Dr. Moore has recognized all of the corporation's income, he sees no need to pay himself a salary. He justifies the treatment by arguing that he is not an employee (i.e., he is the owner) of the corporation, and that the Federal and State income tax consequences are identical. Questions: Do you agree with Moore? What do you think he should do if you don't agree? Would your answer change if the entity was an LLC or C Corporation? What entity do you recommend for Moore. If the facts are not present to answer the question you must provide your assumptions in your research memorandum. Resources and requirements: Use the tax resources (CCH and RIA Checkpoint) to research and answer your questions above. These are located in the Pollack Library on Titanium. Look for reliable primary and secondary authorities to document your research. Make sure you address all types and aspects of taxes. Your research should be written in a memorandum-see format below. Your memorandum should be at least 750 words. Include all your properly cited authorities in order to get full credit. Turn in via Canvas on or before the due date in Cengage. Facts: Dr. Moore is a chiropractor who is the only shareholder of Moore Spine Center, Inc., an S corporation. The corporation offers Moore's services to his own patients. He also has 5 employees working for him. Moore does not receive any regular payments from the corporation as compensation, but he withdraws funds as the need arises. During the current year, he withdrew $200,000, and the net income of the corporation is $325,000. The corporation does not deduct the $200,000, nor does Moore include it in gross income. Moore does, however, report the $325,000 in gross income on his Schedule E from the K-1 received from the S Corporation prepared by his CPA. Because Dr. Moore has recognized all of the corporation's income, he sees no need to pay himself a salary. He justifies the treatment by arguing that he is not an employee (i.e., he is the owner) of the corporation, and that the Federal and State income tax consequences are identical. Questions: Do you agree with Moore? What do you think he should do if you don't agree? Would your answer change if the entity was an LLC or C Corporation? What entity do you recommend for Moore. If the facts are not present to answer the question you must provide your assumptions in your research memorandum. Resources and requirements: Use the tax resources (CCH and RIA Checkpoint) to research and answer your questions above. These are located in the Pollack Library on Titanium. Look for reliable primary and secondary authorities to document your research. Make sure you address all types and aspects of taxes. Your research should be written in a memorandum-see format below. Your memorandum should be at least 750 words. Include all your properly cited authorities in order to get full credit. Turn in via Canvas on or before the due date in Cengage
