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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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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 ...

Solution Summary

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

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