Question

Please provide similarities and differences of the tax consequences of a corporation versus a partnership in terms of formation, distribution, basis, entity level taxation, and dissolution.

Answer 1

Taxation comparison table

Business Entity type	Is business separate from owners?	Taxation	Tax forms filed with the IRS
Sole Proprietorship	No	Income/loss reported by owner/span>	Schedule C or Schedule C-EZ to Form 1040, Individual Income Tax Return
General Partnership	No	Income/loss reported by owners	Form 1065, Return of Partnership Income (info only) and Form 1040, Individual Income Tax Return
LLC	Yes	Income loss/reported by owners	Form 1065, Return of Partnership Income (info only) and Form 1040, Individual Income Tax Return
C Corporation	Yes	Corporate tax paid. Second tax paid by owners if corporate income is distributed to owners in the form of dividends (double taxation).	Form 1120, Corporation Income Tax Return Dividend income reported on Form 1040, Individual Income Tax Return
S Corporation	Yes	Income/loss reported by owners	Form 1120S, Income Tax Return for S Corporation (info only) and Form 1040, Individual Income Tax Return