Corporate form still offers many planning opportunities despite recent changes
Article Abstract:
Changes in the tax code have eliminated many of the advantages C corporations enjoyed over other business entities. The C corporation remains a desirable entity for certain business situations when the goals of a corporation include: establishing long-term operations in a particular business; exploiting particular tax advantages; and limiting exposure to personal liability. C corporations offer tax advantages in the areas of fringe benefits, including: health insurance premiums; medical expense reimbursements; and disability insurance premiums. C corporation advantages in the area of employee benefit plans include: the ability to make contributions regardless of profit status; no restriction on varying contributions to 401(k) plans; and the ability to adopt an employee stock ownership, bonus, or profit sharing plan for employees. Other advantages to C corporations include: no limit on allocating profits; less scrutiny in audits; and the ability to adopt a non-calendar tax year.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1989
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Nonqualified plans offer advantages to S corporations
Article Abstract:
S corporations often sponsor qualified deferred compensation plans even though nonqualified plans that are creatively applied can provide certain tax benefits. Qualified plans fall under two categories: defined contribution and defined benefit. The sponsor's S corporation status does not influence plan design, thus allowing firm owners to design plans based on ordinary planning issues, such as the employees' age and service and desired contribution levels. Nonqualified plans are not too appealing to S corporation owners largely because such plans would require them to bear the current income tax consequences if the assets allotted to finance the plan increase in value. Still, nonqualified plans can be designed in ways that would benefit an S corporation and its shareholders. Four variations of the nonqualified plan, the built-in loss plan, the pension converter plan, the deduction accelerator plan and the death-benefit only plan, are briefly discussed.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1993
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Guidelines for choosing the best form of business changed again
Article Abstract:
Retirement plans, payroll taxes, and accounting methods are no longer major determinants of the form of a new business. Intra-family income shifting is limited by the IRS in all six traditional forms of doing business. The advisability of limited liability is determined by the nature of the business risk and the availability of insurance. The form of business affects the manner in which losses are deducted, tax years, tax rates, fringe benefits, and liquidation.
Publication Name: Taxation for Accountants
Subject: Business
ISSN: 0040-0165
Year: 1988
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