Leland F. Jackson, CPA wrote: > Charlie Coleman wrote: > >> Jumping in the middle here. >> >> At 04:05 PM 9/24/2007 -0500, Leland F. Jackson, CPA wrote: >> >> >>> For income tax purposes a corporation is consider a person, much like >>> you and I. Some corporations can elect to be tax under the IRS rules >>> >>> >> No, you have it backwards. Actually, what the Gov has done is attempt to >> treat individuals like corporations. In other words, the actual tax law is >> supposed to only be taxing "corporate" profit. Look in the archives for a >> link Derek provided. It talks about research into where the personal income >> tax came from. Basically, personal income tax is most likely illegal. I've >> heard about, and done some research on this, before. Why do I still pay >> taxes? Fear. >> >> > From a legal stand point a corporation is like a person in the sense > that a corporation has an existence all it own, separate and apart form > stockholders and management. A corporation can be sued or can sue > others, a corporation can make contracts in it own name, and a > corporation can be found guilty of crimes and torts and made to pay > retribution just like you and I. The IRS must work within the legal > system of each state, for example whether a state is community property > or no, and so the IRS must treat a corporation much like it would an > individual based on the legal system of the state of incorporation. > > Of course there are certain difference between a corporation and > person. For example, you can't put a corporation in prison, nor can a > corporation commit certain crimes like rape, for example, but both a > corporation and person can be put out of existence and punished for > illegal acts. When I said "a corporation is treated like a person" this > is what I meant. See juristic or juridical person in the below link: > > http://en.wikipedia.org/wiki/Juristic_person > > > > >>> after all expenses have already been deduced. Whatever net income is >>> generated is then taxed at a progressive rate, so the more net income a >>> corporation has, the more revenue the Federal Government receives The >>> income tax is not something a Corporation could view, at least in >>> theory, as an expense to be passed on to the consumer, because its just >>> a percentage of net income. >>> >>> >> You're looking at too small a part of the picture. Look at the bigger >> picture in the real world and you'll understand what happens. If corporate >> tax is raised, corporations will raise the price of their products. The >> concept is it increase the percentage of their profit to offset the >> additional percentage lost to higher taxes. >> >> > The tax rate schedule for corporate taxation of net income before taxes > is out of the control of a corporation, once set by congress. The > corporation should strive to maximize profits before taxes. If income > tax expense, which is a progressive percent of net income before taxes, > were factor in to be passed on to the consumer, you create a regressive > equation whereby sales prices are raised to cover the tax liability, > which in tern increases income tax, which in turn requires another > additional raise in sales price ... which adjustment would go on forever. >
What I said here isn't exactly correct. Net income before income tax expense is a figure that appears on the financial statements of a corporation, and is based on Generally Accepted Accounting Principles. Taxable income of a corporation is based on tax rule per the Internail Revenue Code as applied on the Corporate income tax return. Taxable income based on the corporate tax retrun can be very different from the net income before income tax reported on the corporate financial statement. A reconciliation between net income before income tax expense and taxable income should be prepared that explains all the difference between the two. Some of the reconciling item might be income for fiancial statement purposes that is exempt from taxation under the IRC, or vic versa , tax credit that apply to taxes that are not reflected in the financial statements, diffenent handling of depreciation expense for financial statement purposes and tax retrun purposes, special rules that apply to the sale capital items resulting in long term and short term capital gains, etc. > I suppose you could set some target income figure base on a budget, > which would have the income tax applied, but this is not what usually > happens in the real world. Of course the starting point in making any > budget is determining targeted sales as everything else in the budget > would be dependent on that, like level of activity of a manufacture who > would then budget labor a materials need to meet projected sales. The > usual approach for a budget would be to find the right combination to > maximize income before taxes. Then the corporation could explore IRS > tax incentives, loop holes, etc to minimize the tax liability, like > taking advantage of tax credits for renewable energy or energy saving > products. > > >> >> >>> This makes the government more like a partner of the corporation. The >>> government wants the business to success and generate good income, >>> because the government participates in the earnings. >>> >>> >> And I think here you've painted too broad a stroke instead of looking at >> specifics. Government "as a partner" of corporations is not a constant >> thing, and not equal to all corporations. E.g. the break-up of monopolies. >> Also, the political "winds" will continually change Gov from partner to >> adversary based on the ideology currently in power. So I'm not sure where >> you were going with the concept, but realize the generalization of Gov as a >> partner is incorrect or at least inconsistent. >> >> > > Yes, I think the government could be view as a kind of partner that > share in the booty of the corporation's net income before taxes; an > unwanted partner for sure, but a partner none the less. > > >> -Charlie >> >> >> > > Regards, > > LelandJ > Regards, LelandJ [excessive quoting removed by server] _______________________________________________ Post Messages to: [email protected] Subscription Maintenance: http://leafe.com/mailman/listinfo/profox OT-free version of this list: http://leafe.com/mailman/listinfo/profoxtech Searchable Archive: http://leafe.com/archives/search/profox This message: http://leafe.com/archives/byMID/profox/[EMAIL PROTECTED] ** All postings, unless explicitly stated otherwise, are the opinions of the author, and do not constitute legal or medical advice. This statement is added to the messages for those lawyers who are too stupid to see the obvious.
