Writing, using software, and interpreting results is a large part of your learning experience. These assignments are designed to improve your use of technology and communication skills. Using p
Writing, using software, and interpreting results is a large part of your learning experience. These assignments are designed to improve your use of technology and communication skills. Using proper business English and resources from the library you will comment and share your research with your classmates. Make sure you note your source in proper APA format.
Due Dates: This project is completed over several weeks so be sure to follow the due dates carefully.
Grading Rubric: Please refer to the grading rubric specific requirements.
Library Assistance:
Link to Keiser's elibrary resources: http://kesu-verso.auto-graphics.com/MVC/
PowerPoint instruction on how to use the Keiser elibrary: Keiser Slide show Library-Orientation-login-and-navigate-lesson1.pptx Keiser Slide show Library-Orientation-login-and-navigate-lesson1.pptx – Alternative Formats
Guidance on how to log in and use the Keiser elibrary: KU Library login guide2014October3.pdf KU Library login guide2014October3.pdf – Alternative Formats
How to cite work from the library: How to cite work from the library.docx How to cite work from the library.docx – Alternative Formats
This link helps with APA format: https://owl.purdue.edu/owl/research_and_citation/apa_style/apa_formatting_and_style_guide/general_format.html
Graded Activity:
Click on Getting Started to review the requirements for the writing project. Then click the title link above labeled "Week 2 Writing Assignment – Part 2" to upload part 2 of the writing project.
This week's assignment will be a draft of Part 2 of the portfolio project. The final version of Part 2 of the project is due, along with Part 1, in their final versions with Part 3 as the Portfolio Project for this class.
Please use the provided Excel Template for Students' Project (1).xlsx to complete this part of the project. You will need to revisit the main project file above.
Attaching week 1 project to be able to complete part 2
2
Simple Heart
Valery Salazar
Keiser University
Gregory Gosman, C.P.A
Corporate, Business, and Trust Tax
February 12, 2023
MEMO
To: Our Valued Client
From: Tax Professional
Date:2/2/2023
Re: Four Different Legal Entities Recognized by the US Tax System
This memo is intended to provide an overview of the four different legal entities recognized by the US tax system and the fundamental differences in the characteristics across business entities, as well as the pros and cons of transitioning from a sole proprietorship to a corporation. Additionally, the principles of ethical and professional conduct relating to corporate, business, and trust taxation will be discussed.
The four legal entities that are recognized by the US tax system are sole proprietorships, partnerships, corporations, and limited liability companies (LLCs) (Greenman et al., 2021). These entities differ in terms of the way they are taxed, the way they are managed, and the level of liability that owners have for the debts of the business.
A sole proprietorship is the simplest and most common business structure. One person owns and manages them, and that person is liable for all financial obligations. A sole proprietorship may be set up quickly and easily, with no additional paperwork or registrations needed at the state level. [Title of book] (Lidstone, 2021). They are also relatively inexpensive to operate, as the owner does not have to pay any taxes on the business’s profits. The downside of a sole proprietorship is that the owner is personally liable for any debts or legal claims against the business.
Similarly, to how one person may own and operate a sole proprietorship, two or more individuals can own and operate a partnership. However, each partner is personally liable for any debts or legal claims against the business (Hatfield, 2019). Partnerships also do not require any special filing with the state and are relatively inexpensive to operate. The upside of a partnership is that the profits are split between the partners, which can be beneficial for tax purposes.
Corporations are more complex than sole proprietorships and partnerships, as they are distinct authorized organizations from their proprietors. This means that the owners are not personally liable for any of the business’s debts or legal claims (Lidstone, 2021). Corporations are also more expensive to set up and operate, as they require special filing with the state and must pay taxes on their profits. The upside of a corporation is that the owners can benefit from limited liability protection, which can be beneficial in certain situations.
In many ways, limited liability companies (LLCs) combine the best features of corporations and partnerships. As separate and distinct entities from their owners, the owners cannot be held liable for the business's debts or legal claims. Creating and running an LLC also has a low financial impact (Uzoka, 2023). If the business owner has a higher marginal tax rate than the firm, then more of the business's profits will be subject to that higher rate.
When considering whether to transition from a sole proprietorship to a corporation, there are several factors to consider. One of the main advantages of transitioning to a corporation is the limited liability protection afforded to the owners. This implies that the proprietors are never individually accountable for any of the company's liabilities or legal demands, which might give more security in certain circumstances (Lidstone, 2021). Corporations can benefit from certain tax advantages, such as the ability to deduct business expenses from taxable income.
However, there are also some potential disadvantages of transitioning to a corporation. Corporations are more expensive to set up and operate than sole proprietorships, as they require special filing with the state and must pay taxes on their profits. Additionally, the owners of the corporation must comply with certain legal requirements, such as holding annual meetings and filing annual reports.
The principles of ethical and professional conduct relating to corporate, business, and trust taxation are based on standards and practices that are set forth by the Internal Revenue Service (IRS) (Pfeifer & Yoon, 2019). These standards and practices include the obligation to accurately report income and other taxable items, the responsibility to pay taxes in a timely manner, and the requirement to keep accurate records of all financial transactions (Pfeifer & Yoon, 2019). Additionally, tax professionals must adhere to certain ethical codes of conduct, such as acting in the best interests of their clients and treating them with respect.
In conclusion, it is important to understand the four different legal entities recognized by the US tax system, as well as the fundamental differences in the characteristics across these entities. Additionally, when considering a transition from a sole proprietorship to a corporation, it is essential to weigh the pros and cons of such a move. Tax professionals must adhere to certain ethical and professional standards when dealing with corporate, business, and trust taxation.
I appreciate your taking the time to read this. Should you have additional concerns or would want to pursue this matter deeper, please get in touch with us.
Sincerely,
Tax Professional
References
Greenman, C., Esplin, D., Johnston, R., & Richards, J. (2021, July 7). Understanding Ethics in the Varying Segments of the Accounting Profession. Papers.ssrn.com. https://ssrn.com/abstract=3882222
Hatfield, M. (2019). Professionally Responsible Artificial Intelligence. Arizona State Law Journal, 51, 1057. https://heinonline.org/HOL/LandingPage?handle=hein.journals/arzjl51&div=33&id=&page=
Lidstone, H. K. (2021). LLC or Inc.? Entity Selection for a Small Business. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.3938182
Pfeifer, M. G., & Yoon, S. J. (2019). IRS weapons against aggressive tax planning1. Trusts & Trustees, 25(1), 69–74. https://doi.org/10.1093/tandt/tty170
Uzoka, N. C. (2023). ADOPTING A LIMITED LIABILITY PARTNERSHIP FOR THE LEGAL PROFESSION: A CRITICAL REVIEW FROM NIGERIA’S PERSPECTIVE. LAW and SOCIAL JUSTICE REVIEW, 3(2). https://nigerianjournalsonline.com/index.php/LASJURE/article/view/2969
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Sheet1
| A. | Florida Chocolate Inc. current income tax expense or benefit for 20xx | ||||||
| Income before income taxes | |||||||
| Interest from municipal bonds | |||||||
| Nondeductible stock compensation | |||||||
| Nondeductible fines | |||||||
| Book equivalent of taxable income | |||||||
| Net change in cumulative TTD | |||||||
| Net change in cumulative DTD | |||||||
| Net change cumulative TD | |||||||
| Taxable income | |||||||
| x 21% | |||||||
| Current tax expense | |||||||
| B. | Chocolate Florida Inc. deferred income tax expense or benefit for 20xx | ||||||
| Ending balance in TTD | |||||||
| Beginning balance in TTD | |||||||
| Increase in deferred tax liability | |||||||
| Ending balance in DTD | |||||||
| Beginning balance in TTD | |||||||
| Increase in deferred tax asset | |||||||
| Deferred tax expense | |||||||
| Deferred tax benefit | |||||||
| Net deferred tax expense | |||||||
| Tax provision | |||||||
| Current income tax expense | |||||||
| Deferred income tax expense | |||||||
| Total income tax provision | |||||||
| Check | |||||||
| Book equivalent of taxable income | |||||||
| x 21% | |||||||
| Total income tax provision | |||||||
| C. | Reconciliation of Chocolate Florida Inc. total income tax provision with its hypothetical income tax expense | ||||||
| Reconciliation of Effective Tax Rate | Dollars | Percent | |||||
| Provision at 21% | |||||||
| Tax exempt interest | |||||||
| Nondeductible stock compensation | |||||||
| Nondeductible fines | |||||||
| Provision | |||||||
,[removed]
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