Harry and Ilene want to market a new line of kayaks and related gear under the brand name Journeys as a corporation-Journeys Inc. To avoid income taxes at the corporate level, they should form

Question

Harry and Ilene want to market a new line of kayaks and related gear under the brand name Journeys as a corporation-Journeys Inc. To avoid income taxes at the corporate level, they should form​

Quizplus · Accepted Answer

Forming an S corporation would allow Harry and Ilene to avoid income taxes at the corporate level, as S corporations are not subject to federal income tax. Instead, the income, deductions, and credits of the corporation are passed through to the shareholders, who report them on their individual tax returns. A close corporation may provide some benefits, such as flexible management and limited liability, but it does not offer the same tax advantages as an S corporation. An alien corporation refers to a foreign corporation doing business in the United States, while a private corporation is not a recognized legal entity in the United States.

Harry and Ilene Want to Market a New Line of Kayaks