Explain the tax accounting complications in the event of E and the corporation became partners.

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Raising large amounts of capital is more difficult for a partnership than for a corporation. (True or False) What term is used to describe the characteristic of a business entity where an individual(s) associated with an entity can not only lose all of his/her investment in the firm but personal assets can be taken to pay the debts of the firm if necessary? For federal income tax purposes, what term refers to the business entity not being a separate entity from the owners? This type of entity is not taxed but the owner(s) must record the earnings from the business on his/her individual income tax return. What is the characteristic of a partnership that gives the authority to any partner to legally bind the partnership and all other partners to business contracts called? Assess the truth of this statement: The day-by-day transactions of a partnership are recorded in accordance with the double-entry accounting concepts and are recorded exactly like transactions in previous chapters…

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Chapter 18, Problem 11DQ

To determine

Explain the tax accounting complications in the event of E and the corporation became partners.

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Raising large amounts of capital is more difficult for a partnership than for a corporation. (True or False) What term is used to describe the characteristic of a business entity where an individual(s) associated with an entity can not only lose all of his/her investment in the firm but personal assets can be taken to pay the debts of the firm if necessary? For federal income tax purposes, what term refers to the business entity not being a separate entity from the owners? This type of entity is not taxed but the owner(s) must record the earnings from the business on his/her individual income tax return. What is the characteristic of a partnership that gives the authority to any partner to legally bind the partnership and all other partners to business contracts called? Assess the truth of this statement: The day-by-day transactions of a partnership are recorded in accordance with the double-entry accounting concepts and are recorded exactly like transactions in previous chapters…

Ma1. response to the classmate, Amanda Cain, Partnerships are considered flow-through entities meaning, each partner of the business is responsible to pay taxes on their share of the business’s profit/losses. The amount paid on profit/losses is determined by each partner’s investment share of the business. If the business suffers a loss the partners would each take ownership of the amount on their personal income tax rather thank through the partnership as it is not a taxable entity. The same goes for profits, if the business earns a profit each partner must pay taxes on their share. Basic tax filing requirements of a partnership is 1.) file an information return using Form 1065 annually with the IRS and 2.) each of the partners will be required to file an individual income tax return using Form 1040 in addition to Form 1065. The Form 1065 is used to disclose the business’s income/loss and provide a breakdown of how much each of the partners have earned from their share of profit…

1. When do owners of a partnership get the tax benefit of claiming apartnership business loss? What does the partnership entity do with the loss? 2. When do owners of a corporation get the tax benefit of claiming a corporate business loss? What does the corporate entity do with the loss?