LLC's are taxed as a partnership versus Corporations who are taxed twice. How are Corporations - 12836

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1.    Imagine two partners are debating incorporating or remaining a partnership.  What information would you want if you were asked to make this decision?

 

2.    LLC's are taxed as a partnership versus Corporations who are taxed twice. How are Corporations taxed twice?

 

 

3.    Often students get confused on the difference between a Limited Partnership and a Limited Liability Partnership.  What are the main differences?  How are they similar?

 

4.    Let’s think about C and S corporations. How do they relate to a LLC or LLP?  What are their differences, advantages and disadvantages? For example, what are the differences between Corporate Governance, Reporting Requirements, and Capital Raising ability?

 

5.    What about the importance of ethics?  In our reading, Cooke proposes that decisions should be evaluated from a number of perspectives.  What are they and why are they important?

 

6.    Let's take it a step further.  What is the significance of the range?  For example, a firm has two investment options, one with a return range of 5% and another of 13%.  If they wanted lower risk they would choose option 1.  This is an important statement and one that is a fundamental building blocks in finance.  

Low risk = what?
High risk = what?

 

Solution Description

1.    Imagine two partners are debating incorporating or remaining a partnership.  What information would you want if you were asked to make this decision?

I will want to know how risky the business is and what are the odds of people suing them for damages. If the odds are high, it is better to incorporate in order to protect yourself from unlimited liability. I will also want to find out the state they are planning to incorporate in because some states do not allow professionals such as doctors and lawyers to incorporate.

 

2.    LLC's are taxed as a partnership versus Corporations who are taxed twice. How are Corporations taxed twice?