...Forms of Business Business Law/531 Forms of Business A sole proprietorship owner is liable for 100% of the business. This means that any debts of the business are also debts of the owner (Chesseman, 2010). This is a disadvantage for a sole propriety owner. Sole proprietor owner gets a tax break. The owner can file a single personal tax form. A sole proprietor is also subject to the least amount of government regulations of all business entities (Chesseman, 2010). When it comes to running this type of company, there are no legal formalities to forming or dissolving ones business. This is because there are no shareholders, investors or banks involved.When an owner of a sole proprietorship dies, the business dies with them ( Chesseman,2010). One can also convert one’s business into a partnership. In a partnership partners share profits and the losses together. Partners have shared responsibility with debts from business deals. Both partners are subject to financial liability if one partner is negligent.A partnership is exempt from double taxation. In a partnership owners can claim their portion of income generated through the business as personal income tax (Chesseman, 2010). When in a partnership, partners owe a contractual and fiduciary duty to one another (Chesseman, 2010). Partners have to trust one another because they have a fiduciary duty to each other. Partners should not borrow money, enter into secret contracts, or do anything illegal without other partners...
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...CLAW3201 Case Analysis Introduction In Crown Insurance Services Ltd v Commissioner of Taxation (Crown), the issues raised are pertinent to the residence and source of the company under s6(1) of the Income Tax Assessment Act 1936. As cases are determined on the basis of all relevant facts and circumstances of each case, this analysis will focus on how the court’s decision process determined whether Crown had carried on business in the years 2004-2007 inclusive and the existence of central management and control (CM&C) in Australia. The purpose of this is to assess the valuation of Crown’s taxable income, which ultimately resulted in the objective decision to be set aside in favour of the applicant. Evaluation will be made in regards to how the case compares with previous cases and tax rulings and the likely impacts of the case on future commercial practices. Further, what the case infers about the current state of law in this area will also be discussed, as well as the potential degree of changes in modern judgements of residence and source issues within businesses not incorporated in Australia. Past judgements and tax rulings The facts of the case are similar to that of Malayan Shipping Co Ltd v FCT (1946), where the court held that “the mere trading in Australia by a company not incorporated in Australia will not of itself be sufficient to cause the company to become a resident”. This is true and consistent with the statutory definition of resident of Australia,...
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...| How Businesses Are Taxed | Businesses have to pay federal income tax just like individuals. However, different business entities are taxed differently. Understanding these basic differences will help you to identify federal income tax obligations as you conduct business with different business formations. Income taxation can impact commercial transactions between different kinds of businesses, such as sole proprietorships, partnerships, franchised, and corporations. Sole proprietorships A sole proprietorship is a small business owned by a single individual. The owner is the business; the business is not a separate legal entity. The federal income tax obligation to be aware of when conducting business with sole proprietorships is that the sole proprietorship pays income tax only once on the income of the business, which the owner reports on his personal income tax form. There is no separate tax-filing requirement for the business itself. Since the sole proprietor is the business, he is responsible for the same income tax obligations as are most individuals. He does get the benefit of all business deductions, which he can write off against his personal income. In a good year, the owner of a sole proprietorship may want to make capital purchases, and defer payments from creditors until after the end of the tax year, so that he can offset assets and liabilities against his tax burden. Partnerships In a partnership, two or more people agree to combine their money, ideas, skills...
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...his great uncle, the restaurant will be located on Playford Avenue in Whyalla offering both ethnic and organic food to attract customers from the five main markets of minority ethnic groups, students, young couples, tourists, and those concerned about dieting and health. The competitive edge of the restaurant will be its products themselves while it is necessary to promote the products via brochures, discounts, and others as well. The financial status of the restaurant will be appraised every six months as a financial period. After calculation, the restaurant will break even during the second period from May 2011, make profits and have positive assets during the third financial period from November 2011 in spite of a big amount of income tax. Since then, the restaurant will earn acceptable profits to sustain its development,...
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...Brown Ltd for 10 years. On 1 October 2011 she was made redundant as part of a company re organisation. Listed below are facts that will be considered for tax purposes, each will be examined to determine what her taxable income is. • She received her annual leave payout of $ 14 500 Mary’s annual leave payout of $14,500 is assessable income under s83-A and 83-B. However, as her payout is due to redundancy, under subdivision 83-15 it will be taxed at her marginal rate, but no more than 30%. • Termination payment of $ 100 000. Mary Brown was dismissed from her job because her position has been made redundant in a company restructure. She is under 65, was not given a new title within the organisation and her redundancy was made in good faith. These factors satisfy the conditions of redundancy subdivision s83-175 in Taxation Law. Therefore, as part of her redundancy, of the $100,000 termination payment there is a tax free amount of $50,615 (base amount of $8,435 and a service amount of $4,218 for every consecutive full year of employment). This results in a taxable component of $49,385 (figures based on 2011-12 tax rates). • Her superannuation entitlement was $ 250 000 of which $ 25 000 represented her non-deducted contributions. The superannuation specified has been contributed by the employer and is not deductible or tax purposes. After taking 3 months off work Mary decided to set up her own advertising agency “Brown Marketing” in Northcote. On January 21 2012 she signed...
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...Expansion of Business to Norway For the Tax Planning Considerations for Employees By Alexis A. Rutherford Introduction A common priority for any business owner is attempting to reduce their tax liability during their peak earnings and profits during the years. The hiring, spending, savings and growing will help the business. Any United Stated company contemplating doing business abroad should select a structure which maximizes flexibility, minimizes tax and avoid the complexity. In the case of USco contemplating expanding its operations overseas would definitely increase the business and offer opportunities to overseas market that have not been taped into has of yet. Now what the CEO of USco would have to be concerned with when it comes to expansion of his business overseas would be to look at the type of expansion, the impact it would have on his current employees and the tax implications effect that would affect his employees. Now for the CEO of USco we must look at the country of Norway which seems to have all the areas of helping with the expansion of the manufacturing business. In this paper we will reflect on the first the effects on the tax planning consideration for his employees expanding overseas. We will look at how the treaty between Norway and the United States will affect any benefits for employees that will be working there. We will also look at are there credits they may be entitled to , if the payroll of how they receive their...
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...000 for pre-paid expenses. He wants to know how this money will be treated for tax purposes. John’s company is what is known as an LLC or Limited Liability Company, and for U.S. federal income tax purposes, an LLC is treated by default as a pass-through entity. Since John is the only person in the company, the LLC is treated as a “disregarded entity” for tax purposes, and an individual owner would report the LLC’s income or loss on Schedule C of his individual tax return. According to the IRS, Taxable earned income includes: • Wages, salaries, tips, and other taxable employee pay • Union strike benefits • Long-term disability benefits received prior to minimum retirement age • Net earnings from self-employment • Gross income received as a statutory employee (What is Earned Income?, 2012) According to the IRS description above, John earned a total of $325,000 from the case that would be considered taxable income. The $25,000 is included as income for the expenses that John has incurred over the past two years. However, John will only be able to deduct expenses that occurred during the current year and any prior year expenses should have been deducted in the tax year that they were incurred. If this was not completed, he should amend any previous year’s return to reflect the deductions. This money is reported as income and should be reported as such on John and Jane’s personal income tax return. John and his wife file jointly which means that the $325,000 would be...
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...can obtain. Information involving a state’s tax burden, financial status and goals serve useful in assessing a state’s value. After obtaining such information, an individual can enhance their assessment of state’s ability to provide financial favorability to a person or a business. In such a case, research indicates that the state of Colorado, when compared to other states, provide favorable overall economic value for both individuals and businesses. The governmental state of Colorado, like all other states of the U.S., attributes many different taxing sources to obtain funding. The United States Census Bureau measures federal and state taxes in five general taxing categories, which include property taxes, sales and gross receipts taxes, license taxes, income taxes, and other taxes. These tax categories help assess the tax burden on individuals, businesses, and properties. In 2011, Colorado ranked 24th in the U.S. in total tax collected with 9.467 billion dollars (U.S. Census Bureau) . This is a 10.4% increase in total tax collected from 2010’s 8.575 billion dollars (Telles, O’Sullivan, and Willhide, pg. 2). A report released by U.S Census Bureau indicates that this annual increase is caused by a rise in severance tax revenue. Severance tax revenues are taxes placed on extracted natural resources such as oil, gas, and coal (Telles, O’Sullivan, and Willhide, pg. 1). This increase can be caused by either a rise in the severance tax rates or by an increase in production of natural...
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...Chapter 5 Research Case 98 MEMORANDUM Date: July 12, 2012 From: Kathryn Baker To: Teddy Chow (“Taxpayer’s) Tax File Regarding: Federal Income Tax Consequences of damages awarded to the Taxpayer after Taxpayer was injured in an auto accident. I. Relevant Facts: The taxpayer filed a lawsuit to recover damages for personal injuries sustained in a 2000 auto accident. In 2004, a jury awarded the taxpayer $1,620,000. In addition, delay damages in the amount of $1,080,000 were then added to that award, resulting in a total judgment of $2,700,000. The defendants appealed the award, and while the appeal was pending, the parties reached a settlement, which provided for payment to Teddy of $2,550,000. In 2009, after attorney’s fees of $850,000 were subtracted, Teddy received $1,700,000. II. Issue: 1. How are the damages treated for tax purposes? 2. Is the attorney’s fee deductible? III. Relevant Authorities: A. Compensation for Injury or Sickness Internal Revenue Code (“IRC”) Sec. 104(a) provides the general rule that- Except in the case of amounts attributable to (and not in excess of) deductions allowed under section 213 (relating to medical, etc., expenses) for any prior taxable year, gross income does not include that--- IRC Sec. 104 (a)(2) the amount of any damages (other than punitive damages) received (whether by suit or agreement and whether as lump sums or as periodic payments) on...
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...THE SALES TAX SPECIAL PROCEDURE (WITH HOLDING) RULES 2007 Updated By Mr. Hamid Hussain Joint Director Sales Tax & Federal Excise Wing Federal Board of Revenue Islamabad. Phone No. 051-9205360 May not be use as a reference in courts THE SALES TAX SPECIAL PROCEDURE (WITHHOLDING) RULES, 2007 THE SALES TAX SPECIAL PROCEDURE (WITHHOLDING) RULES, 2007 1 Notification No. S.R.O. 660(1)/2007, dated 30th June, 2007 .— In exercise of the powers conferred by sub-section (6) and sub-section (7) of section 3 2 [ and sub-section (4) of section 7] of the Sales Tax Act, 1990, read with section 71 thereof, the Federal Government is pleased to make the following rules, namely:-1. 3 Short title, application and commencement .— (1) These rules may be called the Sales Tax Special Procedure (Withholding) Rules, 2007. [(2) They shall apply to taxable goods and services as are supplied to following persons, hereby specified as withholding agents, for the purpose of deduction and deposit of sales tax, namely:-(a) (b) (c) (d) federal and provincial government departments; autonomous bodies; public sector organizations; taxpayers as fall in the jurisdiction of Large Taxpayers Units for the purpose of sales tax, federal excise duty or income tax; and (e) recipients of service of advertisement, who are registered for sales tax. Explanation.--"withholding agent" includes the accounting office which is responsible for making payment against the purchases made by a government...
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...EST1 - Task 310.2.1-05 The attitude of Company Q towards social responsibility seems to be decreased by the pressure of profit loss. They closed 2 stores recently due to the fact that they were continually losing money. This not only creates a problem for the employee's that worked there, but also for the customers who frequented the stores. By improving their ethical makeup they could not only improve their profits, but it would also help the relationship with their employees and customers grow. There are a few things that Company Q could work on and change to create a better enviroment for the community. They decided to close 2 different stores in higher crime areas stating they were losing money. Instead of closing the stores they could implement new procedures to increase security. Installing cameras or hiring security guards to stand outside the store or patrol inside would show their customers that they are concerned for the safety of those shopping there. Company Q could also could work with other business owners and city government to makes changes to the area surrounding the store. These changes could include a well lit store front, friendly employees, and a well organized store. Company Q would have to make enough improvements to show their customers they care. This could have increased sales and possibly saved the company from closing the two stores. When asked about donating their day old food to the local food bank, the company refused and chose...
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...Limited | FWP | Rent – Marinda house | 20,000,000 | Gain from sale of shares | EXEMPT | | 20,000,000 | Less: Investment allowable expenditures | | Maintenance | 3,500,000 | City rates | 2,250,000 | Kitchen construction | NIL | Investment Chargeable Income | 14,250,000 | Total Income | 43,681,000 | | | | | Tax Liability | TZS | Tax payable on total income | 11,803,500 | Tax payable on final withholding payment | 155,000 | Total tax payable | 11,958,500 | Less: Withholding Taxes Already Paid to TRA | | Final – Dividend | 155,000 | Employment income | 4,654,200 | Net tax payable | 7,149,300 | Question 2 Repartriated Income | TZS | Additional Capital | 150,000,000 | Add: Opening Cost of Assets (Working 4) | 701,000,000 | Less: Net Incoming for Liabilities | (25,000,000) | A | 851,000,000 | | | Total Income (Working 1) | 28,250,000 | Add: Unrelieved Losses | 7,000,000 | Less: Tax Liability (Working 2) | (8,475,000) | B | 26,775,000 | | | Closing Cost of Assets (Working 4) | 628,750,000 | Less: Net Incomings for Liabilities...
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...I have reviewed your situations and each of your tax considerations and outlined my advisement below. Part I: Discuss the various forms of organization that are available to Penelope, Mark and John. There are a few different options from which you can chose to organize your business under. For example: partnership, LLP, S Corporation, C Corporation for which I know you are all familiar with. It is my duty to give you my own educated and unbiased opinion to which would be most beneficial to all of you. Part II: Make your recommendation as to what form of organization you believe will be best and be sure to explain the reasoning for your choice. I find the Limited Liability Partnership to be the best form of organization for your company. It will provide the company with adequate protection while safeguarding each partner’s personal assets as well. Under this organization each of you will be strictly removed from responsibility from one anthers actions or potential misconducts. Given that the three of you are great friends I find this to be the most attractive quality in an organization. Regardless of the outcome of the business I know that you will all find comfort in the safety of the LLP. In turn I find this will lift any further burden and allow you to all perform your best for this new company. In addition, a LLP will provide flexibility in business ownership. Each partner will have the authority to decide how they will each contribute to the business operations. Managerial...
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...ACCOUNTING FOR INCOME TAXES RECONCILIATIONS REQUIRED BY IFRS AND ASPE RECONCILING WHEN USING THE ACCRUAL (DEFERRAL) METHOD IFRS requires that the notes to the financial statements include a reconciliation of the accounting income before income tax multiplied by the statutory tax rate for the year and the income tax expense for the year. When the accrual (deferral) method is used, as is required by IFRS, temporary differences are accounted for through the deferred tax expense for the year so there will be two types of reconciling items. These are the tax effects of permanent differences and the effect of rate changes on deferred tax asset and liability balances. Non-taxable revenues will result in a reconciling item equal to the tax that would have been recognized in income tax expense if the items were taxable. This will be the amount of the non-taxable revenue multiplied by the tax rate for the year. Non-deductible expenses will result in a reconciling item increasing taxes by the amount that income tax expense would have been reduced if the expenses had been deductible. This will be the amount of the non-deductible expenses multiplied by the income tax rate. The impact of the change in income tax rates can be calculated by determining the amount of the temporary differences at the time of the rate change and multiplying by the change in the rate. This can be done for each temporary difference (and then summed) or can be done on the net temporary differences at the...
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...adjust to deviations from its long-term growth trend, whereas Keynes viewed it as unstable and required government intervention to get back on track. Problem 4 Formula?? MPC * additional income ? * 20 billion Problem 5 Yes. The MPC is the fraction of each dollar of disposable income not spent on consumption. If a poor person doesn’t spend the money then it’s considered MPS however the millionare can spend money but the difference remaining can be that equal to the poor person’s MPS. Hence MPS =.25 and MPC=.75 from a $1. Problem 6 Formula MPC x additional income .01 * 1billion= 1 billion Internet Question The North and South both took several approaches to implement and find a successful way to tax the people. The south had one of the “lightest” tax burdens. There was little...
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