The Corporate form of organization: There are several forms of business organizations like proprietorship, partnership , limited liability partnership, Corporation etc. The Corporate form is the most complicated and wider form of business organization. It creates a separate legal identity of the business and allows the business to raise funds through public issue. Characteristic of a corporation are as follows: • Separate legal entity: The Corporate form of business has its own legal identity and owners are personally liable for the debt of the corporation. • Easy availability of funds: As compared with other business form, a corporate form of business can easily raise find by making public issues of its shares. • Separate taxability: The Corporate form of business has its own legal identity and hence it is separately taxed. Hence owners are not liable for the tax liability of the company. • Limited liability of shareholders: Shareholders or owners of the company have limited liability. They are not personally liable for the debts of the company. • Easy transfer of ownership: In the case of a company the ownership is transferred only by the transferring the shares of the company. To identify: The true statements about Characteristic of a corporate form of organization

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 13, Problem 1QS

To determine

Concept Introduction:

The Corporate form of organization:

There are several forms of business organizations like proprietorship, partnership, limited liability partnership, Corporation etc. The Corporate form is the most complicated and wider form of business organization. It creates a separate legal identity of the business and allows the business to raise funds through public issue.

Characteristic of a corporation are as follows:

• Separate legal entity: The Corporate form of business has its own legal identity and owners are personally liable for the debt of the corporation.

• Easy availability of funds: As compared with other business form, a corporate form of business can easily raise find by making public issues of its shares.

• Separate taxability: The Corporate form of business has its own legal identity and hence it is separately taxed. Hence owners are not liable for the tax liability of the company.

• Limited liability of shareholders: Shareholders or owners of the company have limited liability. They are not personally liable for the debts of the company.

• Easy transfer of ownership: In the case of a company the ownership is transferred only by the transferring the shares of the company.

To identify: The true statements about Characteristic of a corporate form of organization

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JH, Inc., is a calendar year, accrual basis corporation with Joe as its sole shareholder (basis in his stock is $90,000). On January 1 of the current year, JH Corporation has accumulated E & P of $200,000. Before considering the effect of the distribution described below, the corporation’s current E & P is $50,000. On November 1, JH distributes an office building to Joe. The office building has an adjusted basis of $80,000 (fair market value of $100,000) and is subject to a mortgage of $110,000. Assume that the building has been depreciated using the ADS method for both income tax and E & P purposes. What are the tax consequences of the distribution to JH and to Joe? (In your answer, be sure to describe the effects on taxable income for both JH and Joe, the impact of the distribution on JH’s E & P, and Joe’s basis in the building.)

Joe is the sole shareholder of JH Corporation. Joe sold his stock to Ethan on October 31 for $150,000. Joe’s basis in JH stock was $50,000 at the start of the year. JH distributed land to Joe immediately before the sale. JH’s basis in the land was $20,000 (fair market value of $25,000). On December 31, Ethan received a $75,000 cash distribution from JH. During the year, JH has $20,000 of current E & P and its accumulated E & P balance on January 1 is $10,000. Which of the following statements is true? a. Joe recognizes a $110,000 gain on the sale of his stock. b. Joe recognizes a $100,000 gain on the sale of his stock. c. Ethan receives $5,000 of dividend income.d. Joe receives $20,000 of dividend income. e. None of the above.

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 13, Problem 1QS

To determine

Concept Introduction:

The Corporate form of organization:

There are several forms of business organizations like proprietorship, partnership, limited liability partnership, Corporation etc. The Corporate form is the most complicated and wider form of business organization. It creates a separate legal identity of the business and allows the business to raise funds through public issue.

Characteristic of a corporation are as follows:

• Separate legal entity: The Corporate form of business has its own legal identity and owners are personally liable for the debt of the corporation.

• Easy availability of funds: As compared with other business form, a corporate form of business can easily raise find by making public issues of its shares.

• Separate taxability: The Corporate form of business has its own legal identity and hence it is separately taxed. Hence owners are not liable for the tax liability of the company.

• Limited liability of shareholders: Shareholders or owners of the company have limited liability. They are not personally liable for the debts of the company.

• Easy transfer of ownership: In the case of a company the ownership is transferred only by the transferring the shares of the company.

To identify: The true statements about Characteristic of a corporate form of organization

Expert Solution & Answer

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Check out a sample textbook solution

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Answer 3

Question

Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 13, Problem 1QS

To determine

Concept Introduction:

The Corporate form of organization:

There are several forms of business organizations like proprietorship, partnership, limited liability partnership, Corporation etc. The Corporate form is the most complicated and wider form of business organization. It creates a separate legal identity of the business and allows the business to raise funds through public issue.

Characteristic of a corporation are as follows:

• Separate legal entity: The Corporate form of business has its own legal identity and owners are personally liable for the debt of the corporation.

• Easy availability of funds: As compared with other business form, a corporate form of business can easily raise find by making public issues of its shares.

• Separate taxability: The Corporate form of business has its own legal identity and hence it is separately taxed. Hence owners are not liable for the tax liability of the company.

• Limited liability of shareholders: Shareholders or owners of the company have limited liability. They are not personally liable for the debts of the company.

• Easy transfer of ownership: In the case of a company the ownership is transferred only by the transferring the shares of the company.

To identify: The true statements about Characteristic of a corporate form of organization

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

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Definition Definition Arrangement between two or more people whereby they agree to manage business operations and share its profits and losses in an agreed ratio. The agreement drafted and signed by the partners of the firm is termed as a partnership deed and contains various important clauses agreed between the partners such as profit/loss sharing, interest on capital, remuneration allocation of each partner, and drawings of a partner.

Chapter 13, Problem 1QS

To determine