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4 Cards in this Set
- Front
- Back
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Formation of controlled corporation
No gain or loss when one or more persons transfer property to a new or existing corporation in exchange for stock if immediately after the exchange the persons transferring property own at least 80% of the corporation's stock. (Prop Contrib to a partnership is also gen tax free) |
* New basis equals old basis less cash ("boot") and mortgages assumed, plus gain recognized. (Typically, this results in the new basis being equal to the old basis).
* NEW CORP's basis is Laurie's basis increased by gain recognized by Laurie. |
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Corporate Distributions
* Regular corps ("C Corporations") pay tax on their taxable income. When corp. pay dividends, shareholders taxed on dividends: 15%. Thus, C corp earnings are double taxed. |
* Subchapter S corps and Partnerhips don't themselves pay tax (LLC treated as partnerships for income tax purposes).
Instead, individual owner recognize taxable income in same yr that entity recognizes income, tho no cash distribution is made. |
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Texas Margin Tax (for tax reports due on or after 1/1/08)
* Taxable margin is determined by taking total revenue less cost of goods sold or compensation. Margin tax imposed on "taxable entity that does business/chartered/organized in TX. |
Revised tax base is the taxable entity's margin. Taxable margin is subject to a 1% tax. Margin equals the lesser of a taxable entity's:
1) total revenue - cost of goods sold 2) total revenue - compensation 3) or total revenue times 70% |
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Texas Margin tax applies to...
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All entities receiving state law liability protection. Margin tax imposed on partnerships, corporations, LLC, business trusts, professional associations, business associations, joint ventures and other legal entities w/statutory liability protection.
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