Discussion Questions In Class Essay Example | Topics and Well Written Essays - 750 words

Discussion Questions In Class - Essay Example A limited liability partnership is an organization in which a number of partners or all of them have limited liability. It is true that this type of organization provides the protection of limited liability, characteristics of a corporation and tax advantages of a partnership, and that there exists many similarities between the limited liability corporation and this kind of partnership. According to Sutton (2001), the limited liability corporation reports its income on a â€Å"schedule corporation tax form and computes its self-employment tax on a schedule self employment tax form†. In the case of multiple member liability limited corporation, self employment tax is paid on the member’s allocations on profits. The corporation’s income is reported separately on a 1065 tax return for partnership with each partner computing the bills for self employment tax on their allocations of partnership gains on the schedule self employment tax forms that go along with the 1040 returns on personal tax (Clifford and Warner 2008). It is therefore not true to say that the profit is not subject to self employment tax. A corporation is taxed and also files taxes. It is also important to note that individuals in the partnership are protected against joint liability in the case of one partner or many in the business commits an act of malpractice or misconduct. It is only the assets of the member who has been proofed to have caused failure due to negligence which are attached in case of business failure (Sutton 2001). When it is treated as a corporation, pay self employment tax is not charged on the corporation’s profit. However, according to Sutton (2001), the 1120 of the liability Limited Corporation reports the corporate income tax that is subjected on the profits. The corporation is usually limited by the shares. Non U.S. residents are allowed to own limited liability corporations. It is