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Justin's firm has been a corporation since its inception and is now an S corporation. He was excited about becoming an S corporation until he
Justin's firm has been a corporation since its inception and is now an S corporation. He was excited about becoming an S corporation until he found out he is taxed just like an individual.
On the basis of the above scenario, answer the following questions:
- Is it correct that Justin will be taxed like an individual now? Why or why not?
- Justin says he can raise more capital as an S corporation? Is he correct? Why or why not?
- Justin believes the management of an S corporation is structured just like that of a corporation. Is he correct? Why or why not?
- Justin wants to go back to being a corporation. Can he do so? Why or why not?
- If Justin wishes to change his status, must all of the shareholders agree? Why or why not?
An S corporation is similar to a C corporation. However, it cannot issue common stock.
- Discuss why it is so. Justify your response with the help of reasoning and examples.
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