Violet Corporation, a C corporation in the 34% tax bracket, will be subject to the AMT this year. Armen, Violet's president, has heard that it can be advantageous to accelerate income and defer deductions to a tax year in which the taxpayer is subject to the AMT. He wonders about the logic of doing this because it would increase Violet's total Federal income tax liability. Violet does not expect to be subject to the AMT next year, but will remain in the 34% bracket. Clarify this planning approach for Armen.
Answer to relevant QuestionsMary and Richerd plan to establish a retail business that will have outlets in six cities in a southeastern state. Because the business probably will generate losses in at least the first three years, they want to use an ...Arnold is going to conduct his business in corporate form. What factors should he consider in deciding whether to operate as a C corporation or as an S corporation? Why are special allocations either permitted or required for the partners in a partnership, yet are not permitted or required for the shareholders in a C corporation or an S corporation? Amber Partnership, a general partnership, has many opportunities to use special allocations. One of the special allocations available to Amber is the optional adjustment-to-basis election under §§ 754 and 743 when a new ...All of the Big 4 accounting firms changed their ownership form from a gen eral partnership to a limited liability partnership. Discuss the legal and tax ramifications of this modification of ownership form.
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