Kamal is starting a new business in 2006, which will operate as an S corporation. This means

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Kamal is starting a new business in 2006, which will operate as an S corporation. This means that income earned by the corporation will be reported by shareholders even if they do not receive distributions. Kamal has $110,000 of income from other sources, and itemized deductions totaling $15,000. He expects that the new business will produce $30,000 of income each year. He is considering giving his son Rashid 20% of the stock in the corporation. Rashid is age 16, ad is Kamal’s dependent. Rashid’s only other income is $2,000 of interest. Neither Kamal nor Rashid will be employed by the stock owned by Kamal or having Kamal own 80% of the stock and Rashid own 20%? Assume Kamal’s filing status is head-of-household and Rashid is single. Ignore other taxes.


Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Federal Taxation 2016 Comprehensive

ISBN: 9780134104379

29th Edition

Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson

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