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4 pages/β‰ˆ1100 words
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APA
Subject:
Accounting, Finance, SPSS
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English (U.S.)
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Topic:

A Comparison of Major Forms of Entity Organizations

Term Paper Instructions:

Your goal is to compare the three major forms of corporate organizations: partnerships, S corporations, and corporations. You will then select a domestic organization, identify its entity type, and describe how the organization’s tax methods are detailed in its financial report.
Instructions
Write a paper in which you do the following:
Use your textbook, the Internet, Internal Revenue Service | An Official Website of the United States Government to research the three major forms of corporate organizations: partnerships, S corporations, and corporations.
Compare and contrast the tax rules and treatment applicable to those three forms of organization and the major way in which the tax treatment affects the shareholders or partners.
Explain at least two reasons why a business owner might opt for one form of organization over another. Provide support for your rationale.
Identify two sources of tax guidance (for example, IRS code, Revenue Procedure) for each form of organization and how it defines a component of the tax policy for that form of organization.
Research an organization by identifying its entity type (corporation, s-corporation, or partnership) and describe how that organization’s tax methods are detailed in their financial reports.

Term Paper Sample Content Preview:

A Comparison of Major Forms of Entity Organizations
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A Comparison of Major Forms of Entity Organizations
In the United States, some of the significant forms of business organizations include partnerships, s corporations, and corporations. The differences in the three types of organizations occur in how they are structured in leadership, management, and taxation. The differences are determined by how organizations started, the changes they have undergone, and the strategy each company wishes to pursue in the future. Given that all three types of organizations exist in the country, each has unique traits, advantages, and disadvantages that help them or challenge their basis of operations and profitability. The paper discusses each type of organization and defines the differences in which each approaches the vital issue of taxes.
Partnerships
A partnership business entity involves two or more owners who operate the business based on a written or oral agreement. While the agreement might not be necessary, it ensures that each person knows their contribution, roles, and expectations, reducing conflicts (Turner & Endres, 2017). Confusion often exists when individuals own a rental property or share expenses on a business. According to the authorities, a partnership that encompasses legal and tax purposes must meet have specific characteristics. There are three types of partnerships: general partnership (GP), limited partnership (LP), and limited liability partnership (LLP). GP consists of partners that participate in the business's day-to-day operations and are responsible for lawsuits and debts. LP involves one or more partners in control of daily operations who retain liability and partners not involved in operations and who do not retain any form of liability. In LLP, liability extends to all partners regardless of whether they are directly involved in the business's daily operations.
Characteristics of Partnerships
Firstly, a partnership agreement upon which all partners adhere to the items must exist. Secondly, the partnership must specify the partners' relationship and what each person contributes to the business. Lastly, the partnership agreement must specify the level of control each partner has in the business. The agreement does not state otherwise. Each partner can enter a contractual agreement with other businesses on behalf of the business. In this type of business, partners are jointly (but not necessarily equally) responsible for all the business liabilities, obligations, and debts (Riggs, Block, Warr, & Gibbs, 2014). In essence, the personal assets of partners can be seized to offset business debts or obligations. Therefore, like a sole proprietorship, the partners' unique legal and financial situations intertwine with the business (Turner & Endres, 2017). Partners are not employees and, therefore, do not receive a regular paycheck from the business. Instead, they receive a distributive share of losses or profits annually depending on the partnership agreement's stipulation.
Tax Rules and Treatment of Partnerships
The IRS requires that each partner pays income tax on their respective distributive share of losses and profits. Eac...
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