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1953-54 Theatre Catalog, 11th Edition, Page 351 (313)

1953-54 Theatre Catalog, 11th Edition
1953-54 Theatre Catalog
1953-54 Theatre Catalog, 11th Edition, Page 351
Page 351

1953-54 Theatre Catalog, 11th Edition, Page 351


In addition, death benefits of $5,000 or loss may be paid, tax free, to beneficiaries of stockholders who are also employees. This may be of special advantage to a former partner who becomes an ems ployee of several corporations, as the $5,000 exemption applies to each corporation.

Corporations also have several disadvantages when compared to partnerships. They are more closely controlled by state law. Profits above $25,000 are subject to Excess Profits Tax and Surtax. Profits are taxed twice: first when earned and then when paid to stockholders as dividends. If dividends are not paid, the company will be taxed on its unreasonable accumulation of surplus.

In order to determine the relative tax advantage of the partnership or the corporation, you must compare the taxes paid by all the partners with the taxes the corporate officers would pay on their salaries and dividends plus the tax the corporation would pay on its profit. However, the tax question is only one of several you should consider before deciding to change from the partnership form to the corporation form, or vice versa. For example, as a partner you have an

TAX FORMS FOR THEATREMEN are Form 1120 for corporations. Form 1040 for individual proprietors and Form 1065 for partnerships.

SCHEDUIE EP (Form "20)

U. 5. Treasury Den-dunk Inhml Revenue Service

5: your name. If your uni: (

. . .s a . had no incomc,or.lf list also her (or his) n

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Your mmv lions r 'T v i e f that sup . E yitnignigi" 05cc Instruct z D Enter number of exempt i E Enter total number 0 cl : linrcr your total wages, s: g 2. roll deductions. Perss'ni mun-Emir e m. 3 ..................... .. i . ' 3 1f ' 2 an e l on page ' I 3. 4 Add isncomc shown in . . T t - um" [:11


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equal voice in the management of the business, but in a corporation you may be a minority stockholder, out-voted by the majority stockholders. In addition, your share of the partnership profits may be greater than your share of the total partnership capital, while as a stockholder your dividends would be paid you according to your stockholdings.

Whether you are contemplating changing from a partnership to a corporation or from a corporation to a partnership be sure you consult a lawyer for the legal requirements and an accountant for the tax questions. The preceding paragraphs present some, but not all, of the points you will want to consider.


The form that you must use in submitting your tax returns depends on your type of business organizationesole proprietorship, partnership, or corporation.

If you are a sole proprietor you must file Schedule C-Schedule of Profit (or loss) From Business or Profession,

Schedule C-a and Computation of SelfEmployment Tax, and the regular tax return, form 1040. If you have capital gains and losses they must be reported on Schedule D.

If you are a partner you must file Form 1040 and Schedule C-a, the purpose of



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the latter form being to report your selfemployment tax. Schedule D must also be filed if you have capital gains and losses. The partnership must file Form 1065U. S. Partnership Return of Income, but pays no tax.

If your business is incorporated the corporation may also be required to file an excess profits tax schedule, EP-1120, and Schedule D-Schedule of Gains and Losses from Sales or Exchanges of

Property. Schedule C

This schedule consists of two parts:

a) Schedule of Profit or loss from

business or profession, and

b) Computation of self-employment

tax (Schedule 3-a)

If you have a good accounting system and the books have been maintained properly you should have no trouble in preparing Schedule C. The form has been set up so that it follows closely along the lines of most Profit and Loss Statements. Line one shows the total business receipts. On the next eight lines cost of goods sold is computed. It is deducted from line one and the resulting gross profit is entered on line 10. On the next ten lines your expenses are listed, totaled on line 21 and deducted from gross profit. The result is entered on line 22. If you have had any losses of business

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1953-54 Theatre Catalog, 11th Edition, Page 351