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.

Comprehend the significance of the Interstate Commerce Act and its relevance to antitrust issues.

Recognize the role of government entities in enforcing antitrust laws and their impact on market practices.

Identify exempt entities and activities from antitrust laws and the rationale behind such exemptions.

Understand the legal defenses available against allegations of antitrust violations.

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Definitions:

Risk-Free Rate

The theoretical return on an investment with zero risk, typically associated with government bonds or treasury bills, serving as a benchmark for judging investment performance.

U.S. GAAP

United States Generally Accepted Accounting Principles, a set of accounting standards and procedures used in the U.S. to compile financial statements.

Accumulated Depreciation

The complete portion of a physical asset's initial cost that has been charged off as depreciation expense from the time the asset became operational.

Historical Cost

The original monetary value of an asset as it appears in the financial records, not adjusted for inflation or changes in value.