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.