Kirk Is Establishing a Business in Year 1 That Could

question 40

Essay

Kirk is establishing a business in year 1 that 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 three 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 for all tax years. Advise Kirk on which tax form he should select.

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Definitions:

Social Entrepreneurs

Entrepreneurs who establish enterprises with the primary goal of solving social problems or effecting social change, using business principles to achieve their objectives.

Accountability

The obligation of an organization or individual to account for their activities, accept responsibility for them, and disclose the results in a transparent manner.

Social Entrepreneurs

Individuals who establish enterprises with the aim to solve social problems or effect social change, typically focusing on innovation and sustainability.

Constituencies

Groups or bodies of voters, customers, or supporters representing a distinct demographic or interest served by an organization, representative, or official.