Business Taxation: A Comprehensive Guide to Entity Choice and Federal Income Tax

52 questions on business taxation, answered and cited by the UpLaw editorial team.

• Can a corporation avoid the second layer of tax by simply never distributing earnings?
• Can a partner be an employee of her own partnership?
• Does forming an LLC save self-employment tax?
• Does guaranteeing my S corporation's bank loan give me basis to deduct losses?
• Does Public Law 86-272 protect my business from state income tax?
• Do federal tax rules for entity choice vary by state?
• How are contributions to a partnership taxed compared with contributions to a corporation?
• How are partnership distributions taxed?
• How are S corporation distributions taxed, and what is the AAA?
• How does selling an LLC differ from selling a corporation?
• How is an LLC taxed if it files no election?
• How is business income apportioned among states?
• How much flexibility do partners have in allocating income and loss?
• How much gain can be excluded under Section 1202?
• How should a founder choose an entity at formation?
• If I convert my LLC to a C corporation, do I get the full Section 1202 benefit?
• Is an LLC member a “limited partner” exempt from self-employment tax?
• Is double taxation always a bad deal?
• What are the check-the-box regulations?
• What are the requirements for stock to qualify as QSBS?
• What did South Dakota v. Wayfair change about sales tax obligations?
• What does it cost to convert from one entity type to another?
• What do Radtke and Watson teach about setting an S corporation salary?
• What happens if an S corporation election terminates?
• What happens tax-wise when a business changes its entity classification?
• What is an S corporation, and how is the election made?
• What is a pass-through entity tax election, and why would a business make one?
• What is a profits interest, and how is it taxed?
• What is a Section 338(h)(10) election?
• What is a specified service trade or business, and why does it lose the 199A deduction?
• What is basis, and why does it matter so much in a pass-through?
• What is early exercise of stock options, and why is it attractive?
• What is phantom income in a pass-through business?
• What is Section 1202 qualified small business stock?
• What is Section 409A, and why does every startup get a 409A valuation?
• What is Section 704(c), and why does it matter to a contributing partner?
• What is self-employment tax and which business owners pay it?
• What is the 83(b) election, and why is the deadline so critical?
• What is the difference between incentive stock options and nonqualified stock options?
• What is the fundamental choice in business taxation — entity-level tax or pass-through?
• What is the reasonable compensation problem for S corporation owners?
• What is the S corporation one-class-of-stock rule, and how do companies violate it accidentally?
• What is the Section 199A qualified business income deduction?
• What planning strategies exist around Section 1202?
• What tax traps arise at closing in an acquisition?
• When does the S corporation salary-versus-distribution strategy actually save money?
• Who is eligible to be an S corporation shareholder?
• Why can't I deduct the losses shown on my K-1?
• Why do buyers want asset purchases and sellers want stock sales?
• Why does partnership debt create basis when S corporation debt does not?
• Why do venture capital investors insist on a Delaware C corporation?
• Why is unremitted sales tax such a dangerous liability?