Module 5 Introduction
Taxation of Business Entities II: Pass-Through Entities
イリノイ大学アーバナ・シャンペーン校(University of Illinois at Urbana-Champaign)
U.S. Federal Taxation 専門講座 における 5 の 4 コース
This course provides an introduction to the U.S. federal income taxation of pass-through business entities, including Subchapter S corporations, partnerships, and limited liability companies. The course focuses on the relevant provisions of Subchapters S and K of the Internal Revenue Code, as well as related Treasury Regulations and judicial opinions, governing the formation, operation, and termination of pass-through entities. Practical in-class study problems facilitate self-discovery of technical tax knowledge along with the development of a variety of professional skills and attitudes.
Michael P Donohoe is a great professor and He explained all the tax provisions very nicely and covered almost the majority of concepts.
This has been thorough and intense with respect to content and coverage of all that matters in every general business entity.
Module 5 Other Pass-Through Entities
In this module, we will examine the concepts of pass-through entities with an introduction to other pass-through business models. We will analyze limited liability companies (LLC), limited liability partnerships (LLP), family partnerships, and Subchapter S corporations (S corp). We will discuss the unincorporated nature of the LLC, which offers both the limited liability of a corporation and the tax implications of a partnership. Next, we will discuss LLP and family partnership. We will also explore the increased limitation to liability and eligibility requirements necessary. Finally, we will analyze the qualifications and procedures for a corporation to elect S corporation status.
Module 5 Introduction3:23
Michael P Donohoe, PhD, CPA
Associate Professor of Accountancy and PwC Faculty Fellow
言語を選択スペイン語フランス語ポルトガル語(ヨーロッパ)ロシア語英語
So far you have learned about the taxation of partnership which is governed by Subchapter K. Subchapter K is unique in that it does not view partnerships as taxable entities. Specifically, Section 701 states that, "A partnership as such shall not be subject to the income tax imposed by this chapter. Persons carrying on business as partners shall be liable for income tax only in their separate or individual capacities." In other words, the income or loss of a partnership instead flows through to the partners at the end of the tax year who report their proportionate share on their tax returns. As a result, the partnership itself pays no entity level federal income tax. This tax treatment occurs whether or not the partnership distributed any profits to the partners during the year. Thus relative to Subchapter C, the primary tax benefit of Subchapter K is single rather than double taxation of business income. Nevertheless, there are some important non-tax disadvantages of operating as a partnership. For example, unlike corporate shareholders, general partners in a partnership typically have unlimited liability and could be called upon to personally settle the debts of a partnership. Also partnerships often have restrictions on the transfer of partnership interests making it difficult for the entity to raise capital and or change ownership upon death or retirement of a partner. For these reasons, most states have adopted other organizational forms that provide the best of both worlds limited liability of a corporation and a single layer of taxation as in Subchapter K. These organizational forms include limited liability companies, limited liability partnerships, family partnerships and Subchapter S corporations. As you might expect these pass-through entities are prevalent accounting for over 50% of all business income tax returns filed in 2011. But if they're so advantageous, why don't all businesses use them? Well, as with most things in tax, there are restrictions on which businesses can use these organizational forms as well as limitations on the resulting tax benefits. In this module, you will learn about these other types of pass-through entities. Specifically, the first lesson examines limited liability companies an increasingly popular organizational form that combines partnership taxation with limited personal liability for all owners. The next lesson covers limited liability partnerships which operate in a manner similar to general partnerships, but with significant legal differences. Next you will learn about family partnerships which are partnerships owned by members of the same family. These entities do not offer limited liability, but are a common pass-through form worthy of your attention. Finally, in the last lesson, you will learn about the basics of Subchapter S corporations, entities incorporated under state law whose shareholders have elected to treat them as pass-through entities for federal tax purposes. Our examination of S corporations will begin in this module and extend into the next module. Where applicable, the lessons are separated into concepts and applications using Sunchaser Shakery.