TAXATION INDIVIDUALS & BUSINESS ENTITIE
10th Edition
ISBN: 9781260799705
Author: SPILKER
Publisher: MCG
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Question
Chapter 15, Problem 1DQ
To determine
List the most common legal entities that are used for operating a business. Discuss how these entities are similar and different for state law purposes.
Expert Solution & Answer
Explanation of Solution
The following are the most common legal entities that are used for operating a business:
- Corporations.
- Limited liability Companies (LLCs).
Partnerships .- Sole Proprietorships.
The following are the similarity of the above entities for state law purposes:
- The state laws protect all the members or owners of Corporations and LLCs from personal legal entities.
- Corporations, Limited liability Companies (LLCs), and Partnerships are identified as business entities for state law purposes.
The following are the differences among the above entities for state law purposes:
- The legal rights and responsibilities, and number of owners of each entity are different from other.
- The tax rule to determine tax on the entities and their owners are different from each other.
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Students have asked these similar questions
Assume that TDW Corporation (calendar-year-end) has 2024 taxable income of $952,000 for purposes of computing the
§179 expense. The company acquired the following assets during 2024: (Use MACRS Table 1, Table 2, Table 3, Table 4,
and Table 5.)
Asset
Machinery
Computer equipment
Furniture
Total
Placed in
Service
September 12
February 10
April 2
Basis
$ 2,270,250
263,325
880,425
$ 3,414,000
b. What is the maximum total depreciation, including §179 expense, that TDW may deduct in 2024 on the assets it placed in service in
2024, assuming no bonus depreciation?
Note: Round your intermediate calculations and final answer to the nearest whole dollar amount.
Maximum total depreciation deduction (including §179 expense)
Evergreen Corporation (calendar-year-end) acquired the following assets during the current year: (Use MACRS Table 1 and
Table 2.)
Date Placed in
Asset
Machinery
Service
October 25
Original
Basis
$ 120,000
Computer equipment
February 3
47,500
Used delivery truck*
August 17
Furniture
April 22
60,500
212,500
The delivery truck is not a luxury automobile.
Note: Do not round intermediate calculations. Round your answers to the nearest whole dollar amount.
b. What is the allowable depreciation on Evergreen's property in the current year if Evergreen does not elect out of bonus depreciation
and elects out of §179 expense?
Lina purchased a new car for use in her business during 2024. The auto was the only business asset she purchased
during the year, and her business was extremely profitable. Calculate her maximum depreciation deductions (including
§179 expense unless stated otherwise) for the automobile in 2024 and 2025 (Lina doesn't want to take bonus
depreciation for 2024) in the following alternative scenarios (assuming half-year convention for all): (Use MACRS Table 1,
Table 2, and Exhibit 10-10.)
a. The vehicle cost $40,000, and business use is 100 percent (ignore §179 expense).
Year
Depreciation
deduction
2024
2025
Chapter 15 Solutions
TAXATION INDIVIDUALS & BUSINESS ENTITIE
Knowledge Booster
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