Short Answer Questions Drew and Carter are starting a construction business and focusing on building townhouses around college towns. They are considering starting a corporation, but heard a partnership might be a better option for them. Now that they are confused, they have come to you seeking your advice on what type of entity they should set up. (1) Please explain the benefits of each a partnership and corporation. Assuming they decided on setting up a corporation, Drew will be contributing a warehouse worth $125,000 which he originally purchased for $50,000 in exchange for 1 of the stock of the company. However, Carter does not know if he will be contributing $100,000 of machinery and $25,000 of cash or the machinery along with $25,000 of services for of the stock of the company. (2) Please explain the tax impact of the formation of the Company and what advice would you give Drew and Carter on what Carter should contribute During year 1, the Compahy Drew and Carter set up is profitable and called DC Townhouses, Inc. Its financials are as follows: Income $1,250,000 Accounts Receivable $100,000 Account Payable $75,000 Purchase of new and used machinery $125.000 Bank loan of $125,000 Interest on a bank loan for the purchase of supplies $10,000 Employee meals $25,000 Client entertainment $12,000 (3) Please advise DC Townhouses, Inc. on its filings requirements and advise DC Townhouses, Inc. on the opportunities you see based upon its financials. In year 10 after amassing a fortune, Drew and Carter decide to close DC Townhouses, Inc. The value of the remaining assets in the company are worth $125,000 and the company has cash on hand of $100,000, (4) Please describe the tax impact of liquidating DC Townhouses, Inc. to both the Company and Drew and Carter