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Corporate formation (Comparison of corporation to other business entities,…
Corporate formation
Comparison of corporation to other business entities
Corporation=1 or more owners
Limited liability company=1 or more owners
Limited partnership=2 or more owners
Partnership=2 or more owners
Sole partnership=1 owner
Formation of C corp
Taxed at corp level and shareholder level
Corporation tax consequences
No gain or loss when issuing stocks
Basis=greater of adjusted basis ( NBV) and Debt assumed by corp
Shareholder tax comsequences
No gain or loss if 80% control and no receipt of boot
Recognition of gain from boot
LIabilities in excess of boot-> gain
Basis of common stock
Cash
Property : asset NBV-liability=Basis in stock( nontaxable)
debt > asset NBV-> basis=0, gain recognized
Services: FMV ( taxable)