FACTS Mike and Sam (two individuals) want to organize an entity to combine their two businesses The combined business is expected to generate significant taxable income in the future However, the combined business expects to lose money in the first few years of operations, i e , report a taxable loss for the first few years QUESTIONS ISSUES 1 What entity would you advise your client to form Please include in your discussion a compare and contrast of the different forms of business regimes including a discussion of a C corporation, an S corporation, a limited liability company (LLC) Also, include in your discussion the different tax consequences between the different types of entities including which of these regimes requires the business entity to pay tax on the income earned and which of these regimes requires the entity owners to pay tax on the income earned by the entity Discuss the short term vs long term benefits detriments of each form of business regime What if the combined entity reinvests all their profits back into the business (i e no distributions to owners shareholders) Does this change any of your advice Instructions Using the above as a background conduct an interview with the clients (Mike and Sam) and gather additional facts (for example, amount of loss and Income expected to be generated by the combined business personal marital status and tax brackets spouses income, if any future growth plans (initial public offering)) All facts should be documented in the memorandum and appropriate schedules and exhibits should be included The written assignment will be graded based on content, writing style, research and analyses used in reaching the conclusion A well written tax memo is the result of thorough research, careful interpretation of the relevant tax authority, application of the tax authority to the clients facts, and clear communication of the research analysis and conclusions The research paper should incorporate the current tax law statute, treasury regulations, tax cases, and revenue rulings procedures The paper may also include references to tax articles from accounting and tax publications and published materials by the accounting and law firms

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Posted on Jul 09, 2024

FACTS: Mike and Sam (two individuals) want to organize an entity to combine their two businesses. The combined business is expected to generate significant taxable

FACTS:

Mike and Sam (two individuals) want to organize an entity to combine their two businesses. The combined business is expected to generate significant taxable income in the future. However, the combined business expects to lose money in the first few years of operations, i.e., report a taxable loss for the first few years.

QUESTIONS/ISSUES:

1. What entity would you advise your client to form?Please include in your discussion a compare and contrast of the different forms of business regimes including a discussion of a C corporation, an S corporation, a limited liability company (LLC). Also, include in your discussion the different tax consequences between the different types of entities including which of these regimes requires the business entity to pay tax on the income earned and which of these regimes requires the entity owners to pay tax on the income earned by the entity.

Discuss the short term vs.long term benefits/detriments of each form of business regime.
What if the combined entity reinvests all their profits back into the business (i.e.: no distributions to owners/shareholders)? Does this change any of your advice?

Instructions: Using the above as a background conduct an interview with the clients (Mike and Sam) and gather additional facts (for example, amount of loss and Income expected to be generated by the combined business; personal marital status and tax brackets; spouses income, if any; future growth plans (initial public offering)). All facts should be documented in the memorandum and appropriate schedules and exhibits should be included.

The written assignment will be graded based on content, writing style, research and analyses used in reaching the conclusion. A well written tax memo is the result of thorough research, careful interpretation of the relevant tax authority, application of the tax authority to the clients facts, and clear communication of the research analysis and conclusions.

The research paper should incorporate the current tax law/statute, treasury regulations, tax cases, and revenue rulings/procedures. The paper may also include references to tax articles from accounting and tax publications and published materials by the accounting and law firms.