Details for Taxable Entities应课税实体细节.pptVIP

Taxation of Regular (C) Corporations Distinguishing tax feature relative to other business entities: double taxation Corporate income is taxed at the entity level and to shareholders when distributed Legal characteristics of the corporate form Limited Liability Continuity of Life Free Transferability of Interests Centralization of Management Corporate Taxable Income Taxable gross income minus allowable business deductions (Chapters 5 6) Taxable net gains on property dispositions - net capital losses not currently deductible (Chapter 7) Special corporate considerations: Charitable contribution limitation Dividends received deduction Special Corporate Issues Corporate deduction for charitable contributions may not exceed 10% of taxable income before charitable contributions Dividends Received Deduction Exception to double taxation for corporate shareholders DRD = 70% of dividends received from less than 20%-owned corporations, 80% for greater than 20%-owned corporations and 100% for affiliated groups Corporate Issues continued Page 1 of corporate tax return reports taxable income Balance sheet reported in corporate tax return is typically book (GAAP) basis Schedule M-1 of corporate tax return requires reconciliation from book (GAAP) income to taxable income before DRD and NOL deductions Corporate Issues continued Consolidated Tax Returns Affiliated group may elect to file one return An affiliated group exists if: A parent corporation owns at least 80% of the stock of at least one subsidiary, and At least 80% of the stock of each other corporation is owned by other group members Advantages: Offset income and gains of one member against losses of another Defer intercompany gains Corporate Tax Liability Regular tax - progressive rate structure Credits against regular tax Non-refundable, excess may be carried forward provide incentive to invest in socially or economically desirable activities by reducing tax cost (increasing after tax return) from investment Personal Se