There is a need for other forms of business ownership beyond sole proprietorship. Small businesses can only do so much to provide the public with an array of goods and services that match the public’s insatiable appetite. To this end, large corporate entities are better equipped to provide the required goods and services. Partnerships, in all of their forms, also fill a niche, especially in the area of services, such as legal, health, and welfare.
When it comes to these business entities’ responsibility for reporting their income and deductions, the tax code becomes very complicated. Their tax reporting needs may require the services of certified public accountants, who know the code thoroughly.
Corporate and partnership tax preparation require highly developed skills in research and analysis.
Provide an explanation for each answer, including any related calculations and evidence.
Include the following criteria from the scoring guide in your responses.
Determine partners’ recognized gains, explaining how much they gained and the rationale.
Prepare self-employment income and basis at the end of the year.
Determine how much gain or loss must be recognized on a distribution, ending partnership basis, and basis in equipment.
Calculate the gain or loss on the sale of a partnership interest.
Determine the basis of the stock in the hands of the shareholder.
Determine taxable income on a C corporation and the book income.
Determine the amount of taxable dividend, nontaxable distribution, and capital gain.