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Due Tuesday 10/22 W6 Topic 1- 3 paragraphs with 3 citations Topic 1 Respond to the following using

Due Tuesday 10/22 W6

Topic 1- 3 paragraphs with 3 citations

Topic 1

Respond to the following using current literature:

Sam is deciding whether he should operate his business as a C corporation or as an S corporation. Due to potential environmental hazard problems, it is imperative that the business have limited liability. Sam is leaning toward the S corporation form because it avoids double taxation. However, he is concerned that he may encounter difficulty several years in the future if he decides to issue some preferred stock to his son as a way of motivating him to remain active in the business. Sue, Sam’s friend, says that he can maintain maximum flexibility by operating as a C corporation. According to her, Sam can avoid double taxation by paying himself a salary equal to the before-tax earnings. As Sam’s tax adviser, what is your advice to him?

Topic 2 – 3 paragraphs with 3 citations

Respond to the following using current literature:

Define the terms temporary difference and permanent difference as they pertain to the financial reporting of income tax expenses. Describe how these two book-tax differences affect the gap between book and taxable income. How are permanent and temporary differences alike? How are they different?

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