A proposal for the repair of a damaged bridge in city P was made. A design was prepared by an LLC named DM, in collaboration with a local sculptor namely S, which was selected by the city. Both DM and person S agreed to work together and divided their assignments, payments, and profits. They successfully completed the project. To find: The imposition of tax on company DM as a partnership or a corporation .

Question

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Answer 1

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 17, Problem 1RE

Summary Introduction

Case summary: A proposal for the repair of a damaged bridge in city P was made. A design was prepared by an LLC named DM, in collaboration with a local sculptor namely S, which was selected by the city. Both DM and person S agreed to work together and divided their assignments, payments, and profits. They successfully completed the project.

To find: The imposition of tax on company DM as a partnership or a corporation.

Expert Solution & Answer

Explanation of Solution

A limited liability company(LLC) would be liable to pay tax as a partnership firm unless it itself declares to be taxed as a corporation. Any LLC which consists of at least two members have the option to choose between a corporation or a partnership taxation.

In this case, both parties have not declared to be taxed as a corporation. Therefore, they will be taxed as a partnership. In a partnership agreement, the profits are transferred through the partners or members who are laible to pay taxes on the profit generated.

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Answer 2

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 17, Problem 1RE

Summary Introduction

Case summary: A proposal for the repair of a damaged bridge in city P was made. A design was prepared by an LLC named DM, in collaboration with a local sculptor namely S, which was selected by the city. Both DM and person S agreed to work together and divided their assignments, payments, and profits. They successfully completed the project.

To find: The imposition of tax on company DM as a partnership or a corporation.

Expert Solution & Answer

Explanation of Solution

A limited liability company(LLC) would be liable to pay tax as a partnership firm unless it itself declares to be taxed as a corporation. Any LLC which consists of at least two members have the option to choose between a corporation or a partnership taxation.

In this case, both parties have not declared to be taxed as a corporation. Therefore, they will be taxed as a partnership. In a partnership agreement, the profits are transferred through the partners or members who are laible to pay taxes on the profit generated.

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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 17, Problem 1RE

Summary Introduction

Case summary: A proposal for the repair of a damaged bridge in city P was made. A design was prepared by an LLC named DM, in collaboration with a local sculptor namely S, which was selected by the city. Both DM and person S agreed to work together and divided their assignments, payments, and profits. They successfully completed the project.

To find: The imposition of tax on company DM as a partnership or a corporation.

Expert Solution & Answer

Explanation of Solution

A limited liability company(LLC) would be liable to pay tax as a partnership firm unless it itself declares to be taxed as a corporation. Any LLC which consists of at least two members have the option to choose between a corporation or a partnership taxation.

In this case, both parties have not declared to be taxed as a corporation. Therefore, they will be taxed as a partnership. In a partnership agreement, the profits are transferred through the partners or members who are laible to pay taxes on the profit generated.

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Answer 4

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 17, Problem 1RE

Summary Introduction

Case summary: A proposal for the repair of a damaged bridge in city P was made. A design was prepared by an LLC named DM, in collaboration with a local sculptor namely S, which was selected by the city. Both DM and person S agreed to work together and divided their assignments, payments, and profits. They successfully completed the project.

To find: The imposition of tax on company DM as a partnership or a corporation.

Expert Solution & Answer

Explanation of Solution

A limited liability company(LLC) would be liable to pay tax as a partnership firm unless it itself declares to be taxed as a corporation. Any LLC which consists of at least two members have the option to choose between a corporation or a partnership taxation.

In this case, both parties have not declared to be taxed as a corporation. Therefore, they will be taxed as a partnership. In a partnership agreement, the profits are transferred through the partners or members who are laible to pay taxes on the profit generated.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 17, Problem 1RE

Summary Introduction

Case summary: A proposal for the repair of a damaged bridge in city P was made. A design was prepared by an LLC named DM, in collaboration with a local sculptor namely S, which was selected by the city. Both DM and person S agreed to work together and divided their assignments, payments, and profits. They successfully completed the project.

To find: The imposition of tax on company DM as a partnership or a corporation.

Expert Solution & Answer

Explanation of Solution

A limited liability company(LLC) would be liable to pay tax as a partnership firm unless it itself declares to be taxed as a corporation. Any LLC which consists of at least two members have the option to choose between a corporation or a partnership taxation.

In this case, both parties have not declared to be taxed as a corporation. Therefore, they will be taxed as a partnership. In a partnership agreement, the profits are transferred through the partners or members who are laible to pay taxes on the profit generated.

Answer 6

Chapter 17, Problem 1RE

Summary Introduction

Case summary: A proposal for the repair of a damaged bridge in city P was made. A design was prepared by an LLC named DM, in collaboration with a local sculptor namely S, which was selected by the city. Both DM and person S agreed to work together and divided their assignments, payments, and profits. They successfully completed the project.

To find: The imposition of tax on company DM as a partnership or a corporation.

Expert Solution & Answer

Explanation of Solution

A limited liability company(LLC) would be liable to pay tax as a partnership firm unless it itself declares to be taxed as a corporation. Any LLC which consists of at least two members have the option to choose between a corporation or a partnership taxation.

In this case, both parties have not declared to be taxed as a corporation. Therefore, they will be taxed as a partnership. In a partnership agreement, the profits are transferred through the partners or members who are laible to pay taxes on the profit generated.

Answer 7

Chapter 17, Problem 1RE

Summary Introduction

Case summary: A proposal for the repair of a damaged bridge in city P was made. A design was prepared by an LLC named DM, in collaboration with a local sculptor namely S, which was selected by the city. Both DM and person S agreed to work together and divided their assignments, payments, and profits. They successfully completed the project.

To find: The imposition of tax on company DM as a partnership or a corporation.

Answer 8

Expert Solution & Answer

Explanation of Solution

A limited liability company(LLC) would be liable to pay tax as a partnership firm unless it itself declares to be taxed as a corporation. Any LLC which consists of at least two members have the option to choose between a corporation or a partnership taxation.

In this case, both parties have not declared to be taxed as a corporation. Therefore, they will be taxed as a partnership. In a partnership agreement, the profits are transferred through the partners or members who are laible to pay taxes on the profit generated.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Ch. 17 - Prob. 1RE Ch. 17 - Prob. 2RE Ch. 17 - Prob. 3RE Ch. 17 - Prob. 4RE Ch. 17 - Prob. 1IS Ch. 17 - Prob. 2IS Ch. 17 - Prob. 1BS Ch. 17 - Prob. 2BS Ch. 17 - Prob. 3BCP Ch. 17 - Prob. 4BCP

Explanation of Solution

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Chapter 17 Solutions