How is a C Corporation formed?
C Corporations are formed by shareholders contributing “stuff” in exchanges for shares in the company. As you can see in the visual below, the “stuff” that shareholders can contribute includes cash, property, or their services.
What is an S-Corporation?
The formation of an S corporation will require an entity to first form a C corporation and then make a subsequent S election. Unlike C corporations, companies that elect S status will not be taxed at the entity level. Instead, their income will be “passed through” to the shareholders of the corporation and will be…
What is a partnership?
A partnership is a type of passthrough entity, meaning the owners individual pay tax and not the business itself. Essentially, any profits or losses generated by the partnership “passthrough” to its partners. The partners then report the income on their individual tax return. The partnership is required to file a form 1065 with the IRS…
What is an LLC?
“LLC” is an acronym for limited liability company. An LLC is a type of passthrough entity, meaning the owners individual pay tax and not the business itself. An LLC is a business structure allowed by state statute in which owners (referred to as members) of the entity are not personally liable for the company’s debts…
What is a passthrough entity?
Passthrough entities, which are also known as flow through entities, are entities that file informational tax returns but will not be taxed at the entity level. This means that instead of the business (or entity) paying tax at the business level, the income will flow through to the taxpayer’s individual tax return and will be…
In a patent infringement lawsuit, should the legal fees be capitalized?
If a company incurs legal fees related to a patent infringement lawsuit, the legal fees should only be capitalized if the company successfully defends their patent (i.e. they win). If the company unsuccessfully defends, then the company expenses the legal fees in the period incurred.
What is the distribution order in bankruptcy?
Once the debtors assets have been aggregated, they will be distributed to creditors based on priority. The three basic payments will be paid out to (1) Secured claimants, (2) Priority claimants, and (3) General creditors. The priority list is as follows:
What is the debtor required to provide after an automatic stay is granted?
Any automatic stay is typically granted to the debtor after chapter 7 bankruptcy is filed. However, right away, the debtor must provide a list of all creditors, a list of all their assets and liabilities, schedule of current income and expenditures, prior 60 day pay stubs, and their federal tax returns for the prior year.
