Surgent's Understanding Corporate Taxation: Formation and Shareholder Compensation

Overview

When a new business is formed, there are a lot of questions. What is the most tax-advantageous way to structure the entity? What issues do we need to be aware of? How should owners pay themselves? For corporations, these questions are even tougher since they are regulated so heavily. In this course, we will discuss how new shareholders can form a corporation tax-free. We will also discuss how basis is calculated for the shareholders, including what to do when debt is involved. Finally, we will discuss different ways that shareholders may be compensated and the pros and cons of each.

Highlights

• Contributions of property at formation
• Basis after the initial transfer
• Implications of boot
• Property transferred that is encumbered by debt
• Stock acquired through gift or inheritance
• Reasonable compensation
• Withholding on bonuses
• ISOs and non-qualified stock options
• Restricted stock and Section 83(b) elections
• Compensation and deduction timing

Prerequisites

A basic understanding of corporate tax laws

Designed For

Accounting and finance professionals with corporate tax clients

Objectives

• Identify the necessary elements for a tax-free corporate formation under Section 351
• Understand when property encumbered by debt may create a gain for a contributing shareholder
• Recognize the elements of reasonable compensation
• Identify the tax implications of incentive stock options (ISOs)

Preparation

None