C corps

Subscribe to C corps

It has become relatively rare for an accountant or attorney to recommend the use of an S corporation for a newly-formed, closely held business.  Instead, the LLC, taxable as a partnership, has become the entity of choice for most start-ups, and for good reason: it is a flow-through entity for income tax purposes, and it…

In the recent case Thousand Oaks Residential Care Home I, Inc. v. Commissioner, the Tax Court considered whether a corporation’s compensation packages for its owner-employees were unreasonable and thus disallowable as deductions.  The facts can be summarized as follows: in 1973, Petitioners “Mr. and Mrs. F.” purchased a struggling corporation called Thousand Oaks Residential…

The owners of a business must consider many tax issues in connection with its sale.  These include the structure of the transaction as a sale of assets or stock, the amount of gain arising from each structure, the character of the gain as ordinary or capital, and the resulting tax liability.  From the foregoing, the…

When a C corporation sells its assets, it recognizes gain equal to the excess of the amount realized on the sale (generally, the purchase price plus any liabilities assumed or taken subject to) over the adjusted basis of the assets being sold.  This gain is subject to a corporate-level Federal income tax at a maximum…