FIN 3104 Lecture Notes - Lecture 2: Preferred Stock, Tax Rate
29 Sep 2016
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Sole proprietorships: 1 person owns, most number of these, legally responsible, easy to establish, low organizational costs, difficult to raise money and transfer ownership. Partnerships: unlimited liability, jointly responsible, limited partnerships. Responsible for amount invested: general partnerships. Just run the business: easy to establish, low organizational costs. Corporations: business form existing separate from owners, limited legal responsibility, easy to buy and sell stock, transfer of ownership does not impact operation, double taxations corp level and dividends. Hybrid: llc runs and is taxed like a partnership, can"t look like a corporation or else it is taxed like one. Between 335000-15000000 both average and marginal tax rates are equal. After 18 1/3 million of taxable income the average and marginal tax rate are the same. Straight line depreciation = allowable dep / # of years. Modified accelerated cost take more depreciation in early years and less in the later years: interest expenses reduce taxes and dividends don"t.
