Capital Gains
Question:
“Zero To 60: What Business Owners Need To Know About Capital Gains,” (http://www.forbes.com/sites/steveparrish/2014/03/24/zero-to-60-what-business-owners-need-to-know-about-capital-gains/#2715e4857a0b58c2aa9f2da0) describes useful ideas that will help you learn more about capital gains and how this tax regime can impact business decisions. After reading this article, determine which of the planning opportunities could be beneficial in a corporate and independent business setting. In detail, convey why or why not? Using the text for this class, describe the pros and cons in business law regarding capital gains.
Please be sure to use the article from Forbes as one of the sources and the eBook I attached as well as one of the sources
Parrish, S. (2014, March 24). Zero to 60: What business owners need to know about capital gains? Forbes. Retrieved from http://www.forbes.com/sites/steveparrish/2014/03/24/zero-to-60-what-business-owners-need-to-know-about-capital-gains/
Seaquist, G. (2012). Business law for managers. San Diego, CA: Bridgepoint Education, Inc.
Answer:
The planning opportunities that could be beneficial in corporate and independent business setting in terms of capital gains include sale of partnership interest, the structuring of stock grants and stock options, and business owner’s personal tax (Parrish, 2014). In the sale of partnership interest, one may derive opportunities relating to capital gains by putting into consideration the tax implications of the so-called “hot assets”. Examples of these assets include certain depreciable assets, inventory, and accounts receivables. In terms of the structuring of stock grants and stock options, focus should be on how various incentive stock plans should be designed to influence how much tax is incurred by the executive. For example, qualified stock options are normally preferred because they are normally subjected to long-term capital gains. However, this advantage must be weighed against the disadvantage posed when the stock options are subjected to minimum tax as required under the law.
PLACE ORDER
There are several pros in business
law regarding capital gains. One of them is that it offers favorable federal
tax rates especially for married and individual tax payers. Businesses also
stand to benefit a lot from capital gains through proper planning, especially
in the filling of taxation forms. In some cases, more benefits may be accrued
if financial benefits are transferred to individuals as opposed to the company
itself as a legal entity. A major disadvantage of capital gains in business law
is that not all types of businesses tend to have an opportunity to take
advantage. Corporations, for example, face serious constraints due to their
inability to leverage capital gains. This is primarily because unlike in the
so-called S corporation, income never flows on an individual level to members
or shareholders (Seaquist, 2012).
References
Parrish, S. (2014). Zero
to 60: What business owners need to know about capital gains. March 24,
2014. Forbes. Web.
Seaquist, G. (2012). Business
law for managers. San Diego, CA: Bridgepoint Education, Inc.
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