2005 Small Business Tax Workshop Book

Table of Contents / Page No.

ENTITY SELECTION  1-66
How is Income Taxed?  2
Types of Entities  2-66
1) Sole Proprietorship  2-7
Non-Tax Considerations  2
Tax Considerations  3-7
Hiring the Children  4
Hiring the Spouse  5
Self Charged Rent  5
Advantages & Disadvantages  7
2) Partnership  7-14
Non-Tax Considerations  7-8
Tax Considerations  8-14
Section 754 Election  9-12
Advantages & Disadvantages  13
Partner’s Basis Worksheet  14
3) Corporation  15-56
Non-Tax Considerations  15-16
General Law  15
Corporate Formalities  15-16
Tax Considerations  16-56
S Corporation  16-20
S Corp. Shareholder Basis Worksheet  18
Employer/Employee Relationships  19
Advantages & Disadvantages of an S Corp  20
C Corporation  20-56
Qualified Personal Service Corp.  21-22
Double Taxation  22-23
Payroll vs Dividend with Examples  23-27
Distributions to Shareholders  28-30
2006 Tax Rates  28
Tax Rate Examples  29-30
When are Corporate Taxes Due?  31
Social Security vs. S.E. Taxes  31
Deductible Fringe Benefits  43
Tax on Invest. Income  43
(Acc. Earnings Tax)  43-45
Acc. Earnings Tax Worksheet  45
Switch from C to S  46-47
Pers. Serv. Corp  48
Sale of Bus./AMT  48
Qual. Retirement Plans  49
Lower Basis for Sale  49
Lower Sales Price  49
Unfavorable Gain/Loss Treatment at Liquidation  50
Cost of Tax Returns  50
Advantages & Disadvantages  39
Sole Proprietorship to C Corporation  51-58
Making the Switch - Transfer of Assets  57-58
Partnership to C Corp  58
Inside Basis vs. Outside Basis  58-59
Partners Transfer Interest  60-61
Liquidate Partnership  61-62
Warning: Partnership to S Corporation  61
Corporation Liquidations  62-66
Reasons for liquidation  62
Drawbacks to liquidating a C Corporation  62-63
Covenant Not to Compete  64-65
Liquidating a C Corporation (Examples)  65-66
C Corporation to S Corporation  67
Built-In Gains Tax  40-56
Built-In Gains Tax Worksheet  42-44
Built-In Gains Tax Example  45-55
4) Limited Liability Company  56-66
Non-Tax Considerations  56
One Member LLC  56-58
Tax Considerations  58-66
Husband and Wife (Community Property States)  59
Self-Employment Tax and the LLC  60-61
Advantages & Disadvantages of LLC  62
Required Records for LLC  62-63
LLC vs. LLP  64
Switching from Corporation to LLC  65
Switching from Partnership to LLC  65-66
DOMESTIC PRODUCTION ACTIVITIES DEDUCTION  161-170
Activities eligible for U.S. production activities deduction  161
Food and Beverage Industry  161
What constitutes manufacture “in significant part"  162
Substantial in nature test   162
Safe harbor test  162
Packaging design and development activities  163
Domestic production gross receipts defined  164
Cost of goods sold and other expenses allocated  164-165
Taxable income/AGI limitation  166
50%-of-W-2-wages limitation  166-167
Domestic Employees  168
Deduction of pass-thru entities  168
Deduction of “expanded affiliated groups”  168
Domestic production activities deduction example  168-169
Businesses that qualify and don’t qualify for the deduction  170
ENERGY EFFICIENT NEW HOME CONSTRUCTION CREDIT  171-174
S CORPORATION DISTRIBUTIONS   175-195
SECTION 351 TAX-FREE INCORPORATION  196-205
Section 351 Transfer Statement  55-56