BUS-A 100 Lecture Notes - Lecture 12: Double Taxation, Net Income, Tax Evasion

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24 Sep 2018
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Partnerships: owned by two or more parties, and the business is not incorporated. The partnership files a tax return but does not pay tax. Income flows through to the owners to pay taxes on their individual returns. (owners pay tax on the taxable income of the business not the amount of cash withdrawn. ) Advantage: easy to establish: disadvantage: all liabilities of the business are considered liabilities of the owner. It is a separate entity from its owners. The corporation files a tax return and is required to pay corporate tax. Advantage: potential loss to the stockholders is usually limited to the amount invested: disadvantage: the income earned by these corporations is subject to double taxation if dividends are paid. A business which has incorporated and has chosen to be taxed as a partnership. It is a separate entity from the owners. The s corporation files a tax return but does not pay tax.

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