S Corporations taxes, accounting homework help
(1,000 Words, APA Format)
Your client has been informed that an S corporation is a popular business form and wants to know more about it. Please write a professional memo to your client responding to his inquiry. Be sure to at least discuss the following items:
- What is an S corporation?
- When is it advisable to be taxed as an S corporation?
- How does an organization become an S corporation?
- If The Car Wash is a corporation, can they be taxed as an S corporation?
- Why or why not?
- What criteria must be met?
- If The Car Wash is a LLC, can it be taxed as an S corporation?
- If so, what does it need to do to elect S corporation status?
- How would The Car Wash report and pay tax if it is an S corporation?
Income Statement for The Car Wash
December 31, 20XX
|
Revenue: |
|
|
Service revenue |
$254,603 |
|
Expenses: |
|
|
Advertising |
2,520 |
|
Depreciation |
31,250 |
|
Insurance |
7,260 |
|
Interest expense |
36,204 |
|
Licenses and fees |
7,260 |
|
Miscellaneous |
4,074 |
|
Office expense |
8,911 |
|
Salaries and wages |
67,460 |
|
Payroll taxes |
9,444 |
|
Employee benefits |
1,349 |
|
Professional fees |
1,210 |
|
Repairs and maintenance |
20,674 |
|
Telephone |
900 |
|
Travel |
1,500 |
|
Utilities |
27,752 |
|
Net income before taxes |
$26,835 |
Balance Sheet for The Car Wash
|
|
January 1, 20XX |
December 31, 20XX |
|
Assets |
||
|
Cash |
$28,638 |
$64,979 |
|
Buildings and other depreciable assets |
555,000 |
555,000 |
|
Accumulated depreciation |
(62,500) |
(93,750) |
|
Total assets |
521,138 |
526,229 |
|
Liabilities and equity |
||
|
Loans |
183,757 |
167,962 |
|
Mortgage |
233,229 |
227,280 |
|
Equity investment |
160,000 |
160,000 |
|
Retained earnings |
(55,848) |
(29,013) |
|
Total liabilities and equity |
$521,138 |
$526,229 |
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