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CORPORATION

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CORPORATION FORMATION Presented By: Nicole Adam Susan Berg Naomi Dimand C Corporations & S Corporations Advantages Disadvantages Similarities C Corporation Advantages ... – PowerPoint PPT presentation

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Title: CORPORATION


1
CORPORATION
  • FORMATION
  • Presented By
  • Nicole Adam
  • Susan Berg
  • Naomi Dimand

2
C Corporations
VS.
S Corporations
3
C CorporationsS Corporations
  • Advantages
  • Disadvantages
  • Similarities

4
C Corporation Advantages
  • Shareholders may be part of management or may
    hire outside management.
  • Not a lot of restrictions or elections required.
  • Can be a domestic or foreign entity.
  • Owner-employee treated as employee for Social
    Security tax and fringe benefits.
  • IRS audits corporation independently of
    shareholders.

5
C Corporation Disadvantages
  • Subject to corporate AMT at corporate level.
  • Passive losses may be restricted.
  • Nonliquidating distributions to shareholders
    taxable as dividends if made from current or
    accumulated E P.

6
S Corporation Advantages
  • Considered a pass-through entity (capital gains
    and losses).
  • Can elect to amortize its organizational
    expenditures under Sec. 248.
  • Shareholders losses are limited.
  • Adjustments are made to basis.

7
S Corporation Disadvantages
  • Subject to tax at corporate level on excess net
    passive income.
  • Limited to 75 shareholders.
  • Cannot be International Sales Corporation.
  • Can own more than 80 of C Corporation but cannot
    file consolidated tax return with C Corporation.
  • Passive investment income cannot exceed 25 of
    gross receipts

8
Similarities of Corporations
  • Corporation income tax and US income tax return
    for S Corps due same time.
  • Subject to passive activity loss rules.
  • Effect of liquidation reorganization on basis of
    entity assets both have taxable step-up to fair
    market value.
  • Sale of ownership interest is treated as sale of
    corporate stock.

9
Similarities contd
  • Period of existence is the same.
  • Transferability of interest.
  • Liability exposure.
  • Taxability of nonliquidating distributions to
    distributing entity.
  • Six month extensions of time permitted.

10
State of Illinois
  • Required
  • Corporate Name
  • Registered Agent Office
  • Corporate Purpose
  • Authorized Shares
  • Issued Shares
  • Consideration
  • Incorporator(s)

11
  • Optional
  • First Board of Directors
  • Allocation Factor
  • Fees
  • Franchise Tax
  • Filing Fee
  • Recorder of Deeds

12
  • Special Requirements
  • Professional Service Corp.
  • Medical Corporation
  • Close Corporation
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