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3. Explain the tax implications of each of the following forms of business: a. Sole proprietor....

3. Explain the tax implications of each of the following forms of business:

a. Sole proprietor.

b. Partnership.

c. Corporation.

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Answer #1

a)Sole proprietorship business structure act as the same entity as the owner of business.In other words,it is not separate from its owner.Business income from sole proprietorship is taxed in the hands of the proprietor.In other words,sole proprietorship income is taxed as the income of owner.

b)Tax implication of partnership is somewhere similar to Sole proprietorship.Partnerships themselves are not actually are not subject to tax.In case of partnership,each of the partners will be taxed upon his or her share of the income from the partnership.

c)Unlike sole proprietorship,corporations are treated as separate legal entity.It means that corporations itself is taxed on all profits it earned.

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