Law Outlines Law and Business Planning Outlines
I handwrote my notes for this entire class and then used the notes to create this outline for the Final Exam. ...
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S Corp | C Corp | SP | GP | LLC | LP | LLP | |
---|---|---|---|---|---|---|---|
| Certificate of Incorporation | Certificate of Incorporation | Default – no filing | Default – no filing | Must file under state LLC Act | Must file w/Secretary of State | Must file a certificate w/OK Secretary of State |
| Board of Directors manages business, not S/Hs | Board of Directors manages business, not S/Hs | Only 1 owner who directly manages everything | Partners have = rights to manage the business, unless they agree otherwise | Member-Managed: Mgmt is shared among the owners Mgr.-Managed: day-to-day operations conducted by “mgrs.” | Limited Partners don’t have mgmt rights – mgmt is in hands of General Partners | Partners have = rights to manage the business, unless they agree otherwise |
| Ltd Liability: S/Hs, board members, & officers not personally liable for business debts of business – paid out of corp assets S/Hs – Veil Piercing | Ltd Liability: S/Hs, board members, & officers not personally liable for business debts of business – paid out of corp assets S/Hs – Veil Piercing | Debts paid from the personal assets of the owner. Individuals are always liable for their personal wrongdoing & for Ks they guarantee | Partners personally liable for the debts of the business—arguably more risky than SP bc also liable for acts of other partners & bc are fragile | Liability of owners (“members”) is limited – not liable for debts of the business | Ltd. Partners are exempt fr liability for debts of firm General Partners are not exempt from liability for debts of firm Both have ltd. liability for tortious acts of other partners | (1) Full Shield States: offer protection fr liability for debts of the business & acts of others (2) Partial Shield States: ltd. liability which shields partners fr vicarious liability for the acts of others, but not debts of business |
| Flow-thru Taxation | Double Taxation | Net income fr business is TI to the SP | Flow-Through | Flow-Through, UNLESS an election is made to be treated as a corporation | Flow-Through | Flow-Through |
| Sale of Shares | Sale of Shares | Easy – only 1 person | Can exit whenever (subject to K), but cashing out can be difficult if nobody interested in buying Usually contractual buyout arrangements w/fellow partners | Doesn’t have to cause a dissolution of the LLC | More confined Under many statutes, LPs are entitled to a return of their capital after some period after giving notice of withdrawal, unless p’ship agreement specifies otherwise | Same as GP – can exit at any time, but may be difficult cashing out – usually contractual buying arrangements w/fellow partners |
| S/H in S Corp only pays SE taxes on the portion of the income that’s attributable to services & any amt in excess of that is considered a return on your investment & is not subject to SE tax | Taking out salary in C Corps is subject to self-employment taxes, so would want to pay out dividends instead | A partner’s distributive share of income fr. a p’ship constitutes earnings fr self-employment | A partner’s distributive share of income fr. a p’ship constitutes earnings fr self-employment Want to fit into limited p’ship exception | GR: Not going to be treated like a limited partner & will have to pay SE taxes Subj. to SE taxes on the income IF 1 of 3 things: (1) have personal liability for the debts of LLC (2) have authority to K OBO LLC, or (3) participate in the bus of the LLC >500 hrs during taxable yrs | LPs are generally not subj. to SE taxes GP under state law is exposed to SE taxes | |
| Gains realized on sale of the assets are taxed to the owners in proportion to their interests in the business, & after those taxes are pd the owners pocket the net proceeds | Worst option b/c of dbl tax, but is mitigated | Gains realized on sale of the assets are taxed to the owners in proportion to their interests in the business, & after those taxes are pd the owners pocket the net proceeds | Gains realized on sale of the assets are taxed to the owners in proportion to their interests in the business, & after those taxes are pd the owners pocket the net proceeds | Gains realized on sale of the assets are taxed to the owners in proportion to their interests in the business, & after those taxes are pd the owners pocket the net proceeds | Gains realized on sale of the assets are taxed to the owners in proportion to their interests in the business, & after those taxes are pd the owners pocket the net proceeds | Gains realized on sale of the assets are taxed to the owners in proportion to their interests in the business, & after those taxes are pd the owners pocket the net proceeds |
| DO increase basis | Do not increase basis (taxable gain can be huge then) | DO increase basis | DO increase basis | DO increase basis | DO increase basis | DO increase basis |
| Very little flexibility—can only have 1 class of... |
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I handwrote my notes for this entire class and then used the notes to create this outline for the Final Exam. ...
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