Partnership Basis: Three individuals recently formed Krypton Company, a company that manufactures car batteries, as a limited liability company (LLC). The three individualsJaylin, Aarna, and Richardown equal interests in the company and substantial income from other sources. Krypton is a manufacturing firm and expects to earn approximately $130,000 of ordinary income and $30,000 of long-term capital gain each year for the next several years. Jaylin will be a full-time manager and will receive a salary of $60,000 each year.

Tax incentives, which include deductions, exemptions, and tax credits, incentivize or encourage businesses to do the right thing in certain areas. These incentives allow the government to acknowledge acceptable decisions a business has made. Incentives provide economic and social meaning and give back to socially responsible businesses. Savvy corporation owners should always be looking for ways to incentivize their partnerships.

This activity will help you with the Project Two milestone and Project Two, where you will be required to further explore tax incentives. As you consider these incentives, think about how this may have an impact on the corporation in your project.