Will, Dan, and Tom form an engineering firm. Tom has an MBA degree and will act as financial expert but has no tax knowledge. Will and Dan will bring clients from their former firm. Tom thinks the new client base will not be large enough to avoid a tax loss for 3 years. After year 3, the firm's profits should increase rapidly. By year 6, Tom estimates that the firm will generate a substantial profit and employ 25 people. Tom isn't sure if the firm should operate as an S corporation, partnership, or corporation. Tom is concerned with how the form of the organization will affect the:

Pension plan the firm will adopt

Firm's ability to compensate current owners and employees and attract new owners or employees

Total tax liability of the owners

Firm's ability to distribute cash and/or property

Write a letter to Tom explaining how theS corporationorganizational form of business will affect each of the italicized items above.