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Discuss the tax law requirements to form a partnership. Incl

1. Discuss the tax law requirements to form a partnership. Include in your discussion the difference in income items, specifically; highlight which items are separately stated. Discuss the calculation of the owners' distributive share and basis.

2. Discuss the tax law requirements to form a S Corporation. Include in your discussion the difference in income items, specifically; highlight which items are separately stated. Discuss the calculation of the owners' distributive share and basis.

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The tax law requirements for the partnership fall on the partners. The partnership is not a tax paying entity. The partnership will file a Form 1065 each year, which is an information return. The net income from the partnership becomes taxable to the partners. Each partner will receive a Schedule K-1 from the partnership with their respective percentage of the partnership's income, which is based on their percent of ownership in the partnership.

Partnership income items that are separately stated include net short-term and net long-term capital gains and losses, Section 1231 gains and losses, charitable contributions, dividends that qualify for a dividend-received deduction, taxes that are paid to a foreign country or to a U.S. possession, and any miscellaneous items as listed in Section 702(a) of the Internal Revenue Code.

The owners' distributive share and basis is calculated as per Internal ...

Solution Summary

Discuss the tax law requirements to form a partnership. Include in your discussion the difference in income items, specifically; highlight which items are separately stated. Discuss the calculation of the owners' distributive share and basis.

2. Discuss the tax law requirements to form a S Corporation. Include in your discussion the difference in income items, specifically; highlight which items are separately stated. Discuss the calculation of the owners' distributive share and basis.

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