Kirk Is Establishing a Business in 2012 Which Could Have

question 44

Essay

Kirk is establishing a business in 2012 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 2012 and thereafter.Advise Kirk on which tax form he should select.

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Definitions:

Aggregate Demand Curve

Describes the buying behavior of a group of consumers. We add up all the individual demand curves to get an aggregate demand curve (the relationship between the price and the number of purchases made by a group of consumers).

Total Demand

Represents the entire quantity of a certain product or service that consumers in a market are willing and able to purchase at a given price level.

Market

A physical or virtual space where buyers and sellers interact to exchange goods, services, or information.

Highest Willingness to Pay

The maximum amount an individual is prepared to spend to obtain a good, service, or outcome, reflecting the perceived value.