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Tax Issues to Consider in the Corporation

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P&J Corporation is to be owned equally by Pete and Joe. The corporation will be formed by exchanging the assets and liabilities of the P & J Manufacturing Partnership for all of the corporation's stock on September 1 of the current year. Both shareholders use the calendar year as their tax year and desire to make an S election.

What tax issues should Pete and Joe consider with respect to the incorporation?

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The tax issues to consider in the corporation for P&J Corporation are examined.

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Tax Issues with an incorporation

P&J Corporation is to be owned equally by Pete and Joe. The corporation will be formed by exchanging the assets and liabilities of the P & J Manufacturing Partnership for all of the corporation's stock on September 1 of the current year. Both shareholders use the calendar year as their tax year and desire to make an S election. What tax issues should Pete and Joe consider with respect to the incorporation?

By holding an S election, Pete and Joe will be forming an S Corporation, shareholders of S corporations, in this case, Pete and Joe, will be required to report the flow-through of income and losses on their personal tax returns and will be assessed tax at their individual income tax rates. This ...

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