Two Owners, One Entity; Flip a Coin: Heads Partnership, Tails S-Corp

This course reviews the business decision process of which type of business entity would best fit the tax needs of a trade or business owned and operated by 2 or more investors.

The course will discuss formation, operation, transfer of assets to obtain ownership, and the eventual liquidation of the business entity from a federal income tax approach.

This course will review Internal Revenue Code provisions for formation under §721 for partnerships, and §351 for corporations, and discuss that the formation is generally treated as a non-taxable event. The session will also review the exceptions to the formation which could trigger a tax at the individual investor level.

The presentation will review the issues of these two separate and distinct pass-through tax entities as they pertain to income tax, including the issues of employment taxes and the similarities and differences for the §199A Qualified Business Income Deduction.

This session will discuss the basis issues of the partner of a partnership, both for the inside basis of the partnerships’ assets and outside basis of the individual partner’s investment as well as the responsibility for entity debt, and the allowance of current year losses.

The session will distinguish the differences between the investment by an S- corporation shareholder and the corporation‘s debt as well as the shareholder loans made to the entity and the limitation on current year losses.