Federal Tax Research 10th Edition by Steven Gill, Gerald Whittenburg, Roby Sawyers, Debra Sanders, William Raabe

Exercise 5

Tom and Verna are going to combine their fishing businesses to become more profitable. Tom currently lives in Mississippi, and Verna lives in Louisiana. They would prefer to set up the business as an S corporation, but only if it will not be subject to state taxation. Since Verna and Tom live within 20 miles of each other, they do not have a preference as to the state of incorporation. Does it make a tax difference which state they choose