Tax Considerations in Business Entity Selection: Advantages and Disadvantages for Counsel and Advisers

Attorneys and tax professionals have several considerations when advising on which business structure a client should use for tax planning purposes. Counsel must evaluate the ownership, tax obligations, and tax compliance requirements that will need to be satisfied on an ongoing basis. To make matters more complex, the original entity type may not continue to be the ideal choice for tax purposes as the company grows and evolves.

A key factor in selecting the best entity is how the entity type affects the tax consequences to the business and the ownership. For those that intend to issue stock/options, raise capital, spin-off separate business lines, or deal with the particular issues of cashing out or business succession, the choice of entity at the beginning can have significant tax and operational impact on the business. For pass-through entities that have to navigate the 20% tax deduction under Section 199A and its many exceptions, a company's current or intended activities must be evaluated. For others, a conversion to a C corporation may be the best option as well.

In addition, some states have different tax rates for various entities and are taking differing approaches on how closely they conform to federal tax law for state income tax purposes. Therefore, failing to consider state tax laws can create avoidable tax difficulties for business owners.

Listen as our expert panel discusses how to make sophisticated decisions regarding entity choice, key provisions of U.S. tax law to be considered in entity selection, and avoiding the tax pitfalls in operations and asset or stock sales.

I. Types of entities

A. Partnerships

B. LLCs

C. Corporations

II. Tax consequences

III. Determining when to convert

A. Circumstances that create need to convert

B. How to determine what to convert to

The panel will review these and other relevant topics:

• How are various business types taxed under current tax law?
• What tax consequences should be considered when choosing an entity?
• What circumstances would create the need to convert a chosen entity?

Learning Objectives:

After completing this course, you will be able to:

• Identify federal tax rules applicable to various entity types
• Understand the tax consequences that must be considered when choosing an entity
• Recognize circumstances that would create the need to convert a chosen entity to another entity type for tax purposes

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite:

  Three years+ business or public firm experience at mid-level within the organization, supervising other preparers/accountants, preparing complex corporate tax forms and schedules. Specific knowledge of rules governing corporate entity structuring, and federal income tax treatment of business entities.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).