MCGRAW-HILL'S TAX.OF INDIV.+BUS.2020
20th Edition
ISBN: 9781259969614
Author: SPILKER
Publisher: MCG
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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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