Team C Learning Team Problems DateTeam CC: 3-3: Because Stan and Susan are currently calendar year taxpayers, they can keep the calendar year or choose a fiscal year depending on when the corporation starts-up. Except if they choose to go with a S corporation. In which they must choose a calendar year. The tax election is the calendar year or fiscal year and the accounting year would follow the one choose. For the calendar year, the corporation reports income and expense from January first to December 31. If the corporation starts up after this date, they must file a short tax year for all the days in operation between the start-up date and the end of the year. The fiscal year can start at any month and end 12 months later at the end of the month. From that point on the fiscal year would be the beginning of the start month and end 12 months later. The only advantage to using one over the other is the time of year the company is the busiest, they might try not to have the most income earned and expense paid at the end of the accounting year. This would require a large pay out of income during the tax period of the year. The disadvantage to either one is they cannot be changed after the choice is made unless the IRS allows it or they meet the exceptions to do it without permission.The accounting methods are determined by the type of corporation. In the case of the new corporation either the accrual or hybrid method may be used. The cash method cannot ...
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