Kirk Is Establishing a Business in 2016 Which Could Have

question 6

Essay

Kirk is establishing a business in 2016 which could have potential environmental liability problems. Therefore, he is trying to decide between the C corporation form and the S corporation form. He projects that the business will generate losses of approximately $100,000 each year for the first 3 years and then will generate profits of at least $200,000 each year thereafter. All profits will be reinvested in the growth of the business. Kirk projects he will be in the 35% bracket in 2015 and thereafter. Advise Kirk on which tax form he should select.

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Definitions:

Peaceful Coexistence

The principle that nations with different ideologies and social systems can live together in the world without war.

Vietnam War Ended

Marks the conclusion of the Vietnam War in 1975, following the fall of Saigon and the subsequent reunification of Vietnam under communist control.

North Vietnam

North Vietnam, officially the Democratic Republic of Vietnam, existed from 1945 to 1976 and was involved in the Vietnam War against South Vietnam and its allies.

Paris Peace Agreement

Refers to the 1973 agreements intended to establish peace in Vietnam and end the Vietnam War, involving the United States, North Vietnam, South Vietnam, and the Viet Cong.