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13 Cards in this Set
- Front
- Back
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Flow through entities
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Sole propriertorship
Partnerships LLC's S Corporations |
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Sole Proprietership Income
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Business income and expenses reported on Schedule C
Business NOL can be carried back 2 years or forward 20 years |
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Insterest, dividends, and rent income related to owner's invesments
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reported on 1040
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Home office deductions
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percentage of house used as office space x house expenses
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Employment Taxes
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6.2% Social Security on wages up to $110,000
1.45% Medicare tax on all wages |
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Self-employment tax
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tax base = 92.35% of net profit reported on Schedule C
Social Security tax = 12.4% Medicare tax = 2.9% |
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Initital Tax Basis in Partnership Interest
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Cash plu adjusted basis of property contributed
+ Share of partnership det which partner could be responsible |
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Guaranteed payment
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special allocation of ordinary income to the partner receiving it, Fica and income tax not withheld
- partnership is allowed a deduction for the guaranteed payment |
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Self- Employment income from partnership
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SE tax must be paid by general partner on
Guaranteed payments and distributive share of ordinary business income from partnership |
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Adjusting partnership basis
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Increase basis
-Contributions - Positive Income - Share of partnership liabilities Decrease basis - Distributions - Losses and deductions |
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Partnership Losses Limited to Basis
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Partners cannot deduct losses in excess of basis
- excess losses are carrierd forward indefinitely until additional basis is restored or by additional contributions or positive income |
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S-Corporations
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Income and losses are adjusted among shareholders based on their % of ownerhsip
- flow through items retain thier character ie income , capital losses etc -distributions are treated as non-taxable recoveries of interest |
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S-corporation basis
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Initital basis= cash + adjusted basis of contributed property
Loan from shareholder to s-corp increases basis for that shareholder -Income increases basis |
