Essays on The Determination of Whether an Entity Is a Ture Entity Essay

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The paper "The Determination of Whether an Entity Is a Ture Entity" is an outstanding example of an essay on business. Corporations are the principal form of organization for the simple reason that they have been in existence for a long time, and consequently, they are numerous and the laws that regulate them are well developed (Beatty & Samuelson, p. 306). One of the aspects of the law regards taxation. Corporations are subjected to a different form of taxation as compared to other business structures. In essence, corporations are types of businesses that must pay their income taxes on accrued profits.

On the other hand, sole proprietorships, partnerships, and limited liability companies or LLCs are not taxed on the business profits they earn. Instead, the profits have to pass through the business establishment to their owners, who eventually report the business profits or losses on their individual tax returns (Kaplan, 2003; Beatty & Samuelson, p. 306). The reason for the differences in methods of taxation as regards corporations is that the corporation is a distinct legal entity from its owners.

Thus, the company’ s profit is taxed in such a manner that the company cannot deduct it as business expenditure. In general, taxable profits encompass money maintained by the company and which is used to cover expenses or the business’ s expansion, referred to as retained earnings as well as profits that are shared by the owners (called shareholders) in the form of dividends (Beatty & Samuelson, p. 306; Hopkins, 2009, p. 67; Van Weeghel, 1998). As per the federal income tax regime, every component of gross income that is received, whether by a commercial entity or an individual, is subject to being taxed, save if there is an express legal provision that exempts from taxation either that type of income or the kind of person involved (Hopkins, 2009, p.

67). There are instances, however, where corporations can be exempted from some form of taxation. This is not automatic though. It involves an analysis of various sections of the law and may entail long lawsuits.

References

Ault, H. J. & Arnold, B.J. & Gest, G. (2004). Comparative income taxation: A structural analysis (2nd edition). New York: Kluwer Law International,

Beatty, J. F. & Samuelson, S. S. (2009). Introduction to business law (3rd edition).

New York: Cengage Learning.

Block, C. D. (2004). Corporate taxation: examples and explanations (3rd edition). Aspen Publishers Online

Hopkins, B. R. (2009). Starting and managing a nonprofit organization: A legal guide (5th edition). New York: John Wiley and Sons.

Kaplan, M. S. (2003). What the IRS doesn't want you to know: A CPA reveals the tricks of the trade (edition 9). New York: John Wiley and Sons.

Lutter, M. (2006). Legal capital in Europe London: Walter de Gruyter.

Mancuso, A. (2009). How to form a nonprofit corporation. New York: Nolo.

Powell, H. M. (2008). The taxation of corporations in New York. New York: BiblioBazaar, LLC.

Samansky, A. J. & Smith, J. C. (1985). Federal taxation of real estate. New York: Law Journal Press.

Thuronyi, V. (1998). Tax law design and drafting, Volume 2. New York: International Monetary Fund.

Van Weeghel, S. (1998). The improper use of tax treaties: with particular reference to the Netherlands and the United States. New Haven: Kluwer Law International.

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