Three investors wish to start a manufacturing business. The business is expected to generate a large income which it will reinvest for many years. Investor#1 has substantial assets which he plans to contribute to the business. Investor #1 is also concenred about showing too much business income on hispersonal return. Which business structure(s) would be most appropriate for the business?1. A limited partnership with Investor #1 as the limited partner.2. A business trust with all three as equal partners.3. An S corporation with all three as equal shareholders.4. AC corporation with all three as shareholders

A C corporation would be the best form of business structure for the situation outlined. It comes…

Answered: Three investors wish to start a…

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter1: Introductin To Taxation

Section: Chapter Questions

Problem 9P

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A & B approach C about forming a general partnership. A & B will each contribute $10,000 cash as start-up funds. C is to contribute no cash but instead work full-time in the business. A & B will work only part-time in the business. A, B, & C will share profits equally. C believes this is a great opportunity for him as he has no investment to risk by going into business with A & C. Is he correct?
Scenario 1: Alex and Jamie decide to start a consulting firm named "Strategic Advisors." Alex contributes$40,000 in cash, and Jamie contributes $60,000 worth of equipment. They agree to share profits andlosses equally.1) What are the initial journal entries to record the formation of Strategic Advisors?2) How would the capital accounts of Alex and Jamie look after these entries
Based on your computations, will you advise Alyssa to put up a partnership and borrow cash for the new equipment? Why or why not?
Ethics in Action Edward Seymour is a financial consultant to cornish Inc, Areal estate syndicate, Cornish finances and develops commercial real estate(office buildings) projects. The completed projects are then sold as limited partnership interests to individual investors. The syndicate makes a profit on the sale of these partnership interests. Edward provides financial information for prospective investors in a document called the offering "prospectus" This document discusses the financial and legal details of the limited partnership investment. one of the company's current projects, called JEDI 2, Has the partnership borrowing money from a local bank to build a commercial office building. The inerest rate on the loan is 6.5% for the first four years. After four years. The interest rate jumps to 15% for the remaining 20years of the loan The intrest expense is one of the major costs of this project and significantly affects the number of reenters needed for the project to break even,…
Jeff Zengel is a financial consultant to Rae properties Inc. a real estate syndicate. Rae Properties Inc. finances and develops commercial real estate (office buildings) The completed projects are then sold as limited partnership interests to individual investors. The syndicate makes a profit on the sale of these partnership interests. Jeff provides financial information for the Offering prospectus which is a document that provides the financial and legal details of the limited partnership offerings. In one of the project the bank has financed The construction of a commercial office building at a rate of 8% for the first four years, after which time the rate jumps to 12% for the remaining 21 years of the mortgage. The interest costs are one of the major ongoing costs of a real state project. Jeff has reported prominently in the prospectus that the break even occupancy for the first four years is 60% this is the amount of office space that must be leased To cover the Interest and…
Franklin, John, Henry, and Harry have decided to pool their financial resources and business skills in order to open up and run a coffee shop. They will share any profits or losses that the business generates and will be personally responsible for making good on any debt that their business undertakes. Their business should be classified as a. corporation. b. sole proprietorship. c. partnership. d. none of the above.
Jeff Zengel is a financial consultant to Rae properties Inc. a real estate syndicate. Rae Properties Inc. finances and develops commercial real estate (office buildings) The completed projects are then sold as limited partnership interests to individual investors. The syndicate makes a profit on the sale of these partnership interests. Jeff provides financial information for the Offering prospectus which is a document that provides the financial and legal details of the limited partnership offerings. In one of the project the bank has financed The construction of a commercial office building at a rate of 8% for the first four years, after which time the rate jumps to 12% for the remaining 21 years of the mortgage. The interest costs are one of the major ongoing costs of a real state project. Jeff has reported prominently in the prospectus that the break even occupancy for the first four years is 60% this is the amount of office space that must be leased To cover the Interest and…
Partnership Operation and Distribution of profit/loss 1. Jay, a businessman, invited two friends to join him in a business venture. He is willing toinvest his business and asked his two friends what their contributions will be. Michael, a balikbayan,would like to invest cash, but doubts he could actively participate in its management since he is inthe Philippines only for a vacation. Nevertheless, he is eager to join the partnership with thecondition that since he cannot actively participate he should be liable only to the extent of what heinvested. Angelo must join the business since his expertise is needed for the type of venture Jay iscontemplating to put up but does not want to make any capital contribution. QUESTION : Jay gives you four alternative methods of dividing profits. Which do you think would be bestfor the partners? Why?a. Based on their contributions ratiob. Salaries to Angelo and Jay with the remainder, if any, based on their contributions ratioc. Salaries to Angelo…
15. A budding entrepreneur wants to start a business but is unsure of the legal form suited for her. Short of cash, she has to take the form that is least expensive and most flexible in terms of decision making and implementation. Which would you recommend? (1 Point) Sole proprietorship Joint venture Partnership O Corporation
Partnership Operation and Distribution of profit/loss 1. Jay, a businessman, invited two friends to join him in a business venture. He is willing toinvest his business and asked his two friends what their contributions will be. Michael, a balikbayan,would like to invest cash, but doubts he could actively participate in its management since he is inthe Philippines only for a vacation. Nevertheless, he is eager to join the partnership with thecondition that since he cannot actively participate he should be liable only to the extent of what heinvested. Angelo must join the business since his expertise is needed for the type of venture Jay iscontemplating to put up but does not want to make any capital contribution. QUESTION : Is it possible for the three friends to put up the business? Identify the roles they will play.
The students in ACCT 450 decide to form apartnership in order to start a business that researchesmergers and acquisitions and sells their analysis toinvestors via a monthly report . Further , they decide*to split the responsibilities of the partnership into*three different areas as follows :". One third of the students invest the majority ofthe capital needed to get the business started ,but do not want to be involved on the daily*operations .One third of the students have extensive*experience in analyzing mergers andacquisitions and plan to perform the majority*of the daily work..The remaining third of the students believe*they provide the most value to the newpartnership by marketing the monthly report totheir investment contacts .RequiredWrite a memo to the other members of ACCT 450proposing two different ways the partnership canfairly allocate the profits of the partnership among*the three different groups of partners identified.above . Feel free to be creative , but please make…
Explain why partnership is a good form of business in your dream business and how are you going to finance it. Make your explanation as clear and detailed as possible.

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