Earl Jackson, the owner of a computer sales business, hascontacted your firm to help him determine which type of entitywould be most advantageous as he merges with another company togrow his business. Supporting documents are provided in theResources tab for your analysis. Your coworker, a staff accountantat your firm, Beach & Seas CPAs, has prepared a letterexplaining the advantages and disadvantages of each type of entity.Juan Orlando, the managing partner, has asked you to review theletter and the supporting documents to make any necessarycorrections before he signs and sends it to the client.
To revise the document, click on each segment of blue, bold,underlined text below and select the needed correction, if any,from the list provided. If the underlined text is already correctin the context of the document, select [Original text] from thelist
context of the document, select [Original text] from thelist.
Beach & Sea CPAs, LLP
2300 Ocean Drive
Flipperville, FL 33999
January 10, 20X1
Earl Jackson
48684 Clermont Avenue
Flipperville, FL 33999
Dear Earl:
Based on our meeting last month, it is our understanding thatyou are planning to combine your business with AA Computer Service,Inc. (AACS), owned by Kathleen Hamilton, and are seeking an entitywith more flexibility than your current sole proprietorship.The new business, E&K ComputerLand (E&K), will bean accrual basis, calendar-year entity.(*A) Both you andKathleen will continue to be calendar-year taxpayers. Three of theoptions available to the new combined computer sales and servicebusiness are a regular C corporation (C Corp), an S corporation (SCorp) and a general partnership (Pship). However, to be aPship, AACS must liquidate, as it cannot be a partner of E&K;only individuals can be owners in a Pship.(*B)
When determining which entity form to choose for your newbusiness, there are several factors to be considered. An importantfactor is the taxation of the business. S Corps areseparate taxable entities, so double taxation can occur when theentity has taxable income and distributions are made.(*C)Pships and S Corps are tax reporting entities, meaning theentity level income flows through to the owners and is taxed onlyonce on the ownersâ personal returns.(*D) With CCorps and S Corps, income and losses are allocated according to thecapital interest accounts.(*E) This provides moreflexibility than with Pships, which requires an allocation based oncapital interest accounts.(*F)
The possible loss due to a lawsuit or upon liquidation should beconsidered when selecting the entity form.S Corps and Pships have the least protection because ownersinclude all liabilities in their basis; whereas a C Corp has theability to limit liability since owners are liable only to theextent of their investment.(*G) When you decide to expandthe ownership of E&K, limited liability may be of greatimportance to new investors. Speaking of investors, in C Corps andPships, there can be multiple classes of ownership.However, in S Corps there can only be one class ofownership, and at least one of the owners must be a CCorp.(*H)
I hope this information helps you with your decision as to whichentity form is best for E&K ComputerLand. Let us know whatdecision you make, and we will be happy to help you with theaccounting and tax aspects of combining your business with AACS tocreate E&K.
Sincerely,
Juan Orlando, CPA
Managing Partner
Answer Options to choose from for each *marked sentence:
(*A)
[Original text] The new business, E&K ComputerLand(E&K), will be an accrual basis, calendar-year entity.
- [Delete text]
- The new business, E&K ComputerLand (E&K), will be anaccrual basis, fiscal-year entity.
- The new business, E&K ComputerLand (E&K), will be acash basis, calendar-year entity.
- The new business, E&K ComputerLand (E&K), will be acash basis, fiscal-year entity.
- The new business, E&K ComputerLand (E&K), will be ahybrid basis, calendar-year entity.
- The new business, E&K ComputerLand (E&K), will be ahybrid basis, fiscal-year entity.
(*B)
[Original text] However, to be a Pship, AACS mustliquidate, as it cannot be a partner of E&K; only individualscan be owners in a Pship.
- [Delete text]
- However, to be a C Corp, AACS must liquidate as it cannot be ashareholder of E&K; only individuals can be owners in a small CCorp.
- However, to be a C Corp, you must incorporate your businessbecause AACS, which is a C Corp, cannot combine with a soleproprietorship.
- However, to be an S Corp, AACS must liquidate, as it cannot bean owner of E&K; C Corps cannot be owners in an S Corp.
- However, to be an S Corp, you must incorporate your businessbecause AACS, which is a C Corp, cannot combine with a soleproprietorship.
(*C)
[Original text] S Corps are separate taxable entities,so double taxation can occur when the entity has taxable income anddistributions are made.
- [Delete text]
- C Corps are separate taxable entities, so double taxation canoccur when the entity has taxable income and distributions aremade.
- Pships are separate taxable entities, so double taxation canoccur when the entity has taxable income and distributions aremade.
- C Corps and S Corps are separate taxable entities, so doubletaxation can occur when the entity has taxable income anddistributions are made.
- S Corps and Pships are separate taxable entities, so doubletaxation can occur when the entity has taxable income anddistributions are made.
- C Corps and Pships are separate taxable entities, so doubletaxation can occur when the entity has taxable income anddistributions are made.
(*D)
[Original text] Pships and S Corps are tax reportingentities, meaning the entity level income flows through to theowners and is taxed only once on the ownersâ personal returns.
- [Delete text]
- C Corps are tax reporting entities, meaning the entity levelincome flows through to the owners and is taxed only once on theownersâ personal returns.
- S Corps are tax reporting entities, meaning the entity levelincome flows through to the owners and is taxed only once on theownersâ personal returns.
- Pships are tax reporting entities, meaning the entity levelincome flows through to the owners and is taxed only once on theownersâ personal returns.
-C Corps and S Corps are tax reporting entities, meaning theentity level income flows through to the owners and is taxed onlyonce on the ownersâ personal returns.
- C Corps and Pships are tax reporting entities, meaning theentity level income flows through to the owners and is taxed onlyonce on the ownersâ personal returns.
(*E)
[Original text] With C Corps and S Corps, income andlosses are allocated according to the capital interestaccounts.
- [Delete text]
- With S Corps and Pships, income and losses are allocated on aper-share, per-day ownership basis.
- With C Corps and Pships, income and losses are allocated basedon the initial investments in the entity.
- With S Corps, income and losses are allocated based on thebalances in the ownership accounts.
- With Pships, income and losses are allocated based on theownership agreement, and special allocations are permitted.
- With C Corps, income and losses are allocated by the board ofdirectors.
(*F)
[Original text] This provides more flexibility thanwith Pships, which requires an allocation based on capital interestaccounts.
- [Delete text]
- This provides more flexibility than with C Corps, whichrequires an allocation based on the board of directorâsdeclarations.
- This provides more flexibility than with S Corps, whichrequires an allocation based on per-share, per-day ownership.
- This provides more flexibility than with Pships, whichrequires an allocation based on the ownership accounts.
- This provides more flexibility than with S Corps, whichrequires an allocation based on the ownership agreement.
- This provides more flexibility than with C Corps, whichrequires an allocation based on initial investments in theentity.
(*G)
[Original text] S Corps and Pships have the leastprotection because owners include all liabilities in their basis;whereas a C Corp has the ability to limit liability since ownersare liable only to the extent of their investment.
- [Delete text]
- C Corps have the least protection because upon liquidation,owners must contribute to the entity to the extent of any losses;whereas S Corps and Pships are only liable to the extent ofrecourse debt.
- General Pships have the least protection because there isunlimited liability for the owners; whereas C Corps and S Corpshave the ability to limit liability since the owners are liableonly to the extent of their investments.
- S Corps have the least protection because upon liquidation,owners are liable to the extent of recourse debt; whereas C Corpshave the most protection due to the owners being liable only to theextent of their investment.
- S Corps and Pships have the least protection because ownersinclude all liabilities in their basis; whereas C Corps owners areonly liable to the extent of their investment plus short-term debts(accounts payables).
- C Corps and S Corps have the least protection because to theextent of recourse debt, the owners are liable; whereas Pshipsowners increase their protection by including all liabilities intheir basis.
(*H)
[Original text] However, in S Corps there can only beone class of ownership, and at least one of the owners must be a CCorp.
- [Delete text]
- However, in S Corps there can only be one class of ownership,and the owners must be within the same family or limited extendedgroup.
- However, in S Corps there can only be one class of ownership,and this class must all have the same voting rights
- However, in S Corps there can only be one class of ownership,and revenue cannot be of a passive nature.
- However, in S Corps there can only be one class of ownership,and not more than 75 owners of which none are C Corps.
- However, in S Corps there can only be one class of ownership,and not more than 100 owners of which none are nonresidentaliens.
ADDITIONAL DOCUMENTATION ON NEXT PAGE
ENTITY AGREEMENT DRAFT Incomplete
(Not for legal use; planning purposes only)
THIS AGREEMENT (the "Agreement") made and entered into this__________day of __________,in the year __________(the "ExecutionDate"), among
·Earl Jackson of 48684 Clermont Ave, Flipperville, FL33999,owner of Jackson Computer Sales
AND
·AA Computer Services, Inc. of 2400 Ocean Drive, Flipperville,FL33999, whose sole shareholder is Kathleen Hamilton of 6203 FrontStreet, Flipperville, FL 33999
Thereby set forth their desire to combine Jackson Computer Salesand AA Computer Services, Inc. to create a new entity of E&KComputerLand to be located at 2400 Ocean Drive, Flipperville,FL33999.The ownership percentages will be based on the net fairvalue of the assets contributed to E&K ComputerLand.
Legal Entity
The parties agree that the combination of Jackson Computer Salesand AA Computer Services, Inc. will result in E&K ComputerLand,carrying on business in the form of a __________legal entity withall the rights, privileges and obligations prescribed by the statelaw of Florida. All documents, licenses, and registrationsnecessary to create the legal entity will be filed with the Stateof Florida.
Tax Entity
In accordance with the law of the Internal Revenue Code(IRC),E&K ComputerLand will elect to be taxed asa(n)__________entity and file a Form__________tax return.
Accounting Method:
As required by the IRC, the entity will use the accrual methodfor determining its gross profit from sales of inventory and thecash method for all other aspects of the business, where possible.Valuing inventory will use the lower of cost or market andfirst-in, first-out methods.
Tax Year:
The ending date of the tax year will be determined based on thetax law requirements. If
there are options, March 31 is preferred, followed by June 30and October 31. A calendar year is the least desired.
Notes for Completing Draft
Income:
If the entity created is â
·C Corporation: Earl and Kathleen will receive salaries. Any netincome in excess of reasonable business needs being retained willbe paid as dividends based on common share ownership.
·S Corporation: Earl and Kathleen will receive salaries. Allincome and expenses will be allocated based on tax law with onlycommon stock issued to owners.
·Partnership: Earl and Kathleen will receive guaranteedpayments. All income and expenses will be allocated based on thisagreement. Profit and loss allocations to be based on ownership
percentages with rights to adjust as partners deem necessary. Inaddition, all of the depreciation on the building located at 2400Ocean Drive, Flipperville, FL 33999, will be allocated to Kathleen,and income from initial inventory will be allocated to Earl.
EMAIL From: Kathleen Hamilton [[email protected]]
Sent:Thursday, January 5, 20X1 7:50 PM
To:Juan Orlando
Subject: Re: Combination of Businesses
Hello Juan,
Here is the information you requested about AA Computer Services(AACS).
·Set up as a regular corporation within Florida.
·Files an 1120 tax return with a March 31 year-end with about$300,000 of gross
income.
·Uses cash basis of accounting primarily because it is a servicebusiness.
·For the few sales of products, accrual basis is used.
·AACS has a $300,000 mortgage on its building. Earl will move inhis business here and our new company will be at this location. Noother liabilities.
Iâm not expecting to have to liquidate to combine with Earlâsbusiness. Please let me know if this is not the case.
As requested by the lawyers, I had AACS appraised by Jefferson& Sons. The appraisal came in at $700,000. The formal write-upwith all the details was sent directly to the lawyers, and I hadanother copy sent to you.
As for tax information for me, I just have a salary from AACS,which is basically whatever net income AACS has for the year afterall other expenses. I have some investment income and that isit.
Let me know if you need anything else.
Kathy
EMAIL From: Earl Jackson[[email protected]]
Sent: Friday,January 6, 20X1 4:31 PM
To:Juan Orlando
Subject:Re: Combination of Businesses
Dear Juan,
I just got the appraisal from Jefferson & Sons and theyvalued my business at $500,000. Of course, this does not take intoconsideration that I owe $200,000 on my business loan. They saidthat Kathy Hamilton told them to send a copy of her appraisal andmine to Beach & Sea and Davis, Garcia & Brown, so youshould receive a copy of both at the same time.
You asked about my taxes for Jackson Computer Sales. Most of the$400,000 gross revenue comes from sales of computers, monitors,peripherals, and accessories. I also sell tablets. All of itsincome and expenses have been reported on my personal return on mySchedule C. I pay self-employment taxes on the net amount, whichhas been about $100,000.
If there is anything else you need, just let me know.
Have a great weekend,
Earl
Earl Jackson, the owner of a computer sales business, hascontacted your firm to help him determine which type of entitywould be most advantageous as he merges with another company togrow his business. Supporting documents are provided in theResources tab for your analysis. Your coworker, a staff accountantat your firm, Beach & Seas CPAs, has prepared a letterexplaining the advantages and disadvantages of each type of entity.Juan Orlando, the managing partner, has asked you to review theletter and the supporting documents to make any necessarycorrections before he signs and sends it to the client.
To revise the document, click on each segment of blue, bold,underlined text below and select the needed correction, if any,from the list provided. If the underlined text is already correctin the context of the document, select [Original text] from thelist
context of the document, select [Original text] from thelist.
Beach & Sea CPAs, LLP |
2300 Ocean Drive |
Flipperville, FL 33999 |
January 10, 20X1
Earl Jackson
48684 Clermont Avenue
Flipperville, FL 33999
Dear Earl:
Based on our meeting last month, it is our understanding thatyou are planning to combine your business with AA Computer Service,Inc. (AACS), owned by Kathleen Hamilton, and are seeking an entitywith more flexibility than your current sole proprietorship.The new business, E&K ComputerLand (E&K), will bean accrual basis, calendar-year entity.(*A) Both you andKathleen will continue to be calendar-year taxpayers. Three of theoptions available to the new combined computer sales and servicebusiness are a regular C corporation (C Corp), an S corporation (SCorp) and a general partnership (Pship). However, to be aPship, AACS must liquidate, as it cannot be a partner of E&K;only individuals can be owners in a Pship.(*B)
When determining which entity form to choose for your newbusiness, there are several factors to be considered. An importantfactor is the taxation of the business. S Corps areseparate taxable entities, so double taxation can occur when theentity has taxable income and distributions are made.(*C)Pships and S Corps are tax reporting entities, meaning theentity level income flows through to the owners and is taxed onlyonce on the ownersâ personal returns.(*D) With CCorps and S Corps, income and losses are allocated according to thecapital interest accounts.(*E) This provides moreflexibility than with Pships, which requires an allocation based oncapital interest accounts.(*F)
The possible loss due to a lawsuit or upon liquidation should beconsidered when selecting the entity form.S Corps and Pships have the least protection because ownersinclude all liabilities in their basis; whereas a C Corp has theability to limit liability since owners are liable only to theextent of their investment.(*G) When you decide to expandthe ownership of E&K, limited liability may be of greatimportance to new investors. Speaking of investors, in C Corps andPships, there can be multiple classes of ownership.However, in S Corps there can only be one class ofownership, and at least one of the owners must be a CCorp.(*H)
I hope this information helps you with your decision as to whichentity form is best for E&K ComputerLand. Let us know whatdecision you make, and we will be happy to help you with theaccounting and tax aspects of combining your business with AACS tocreate E&K.
Sincerely,
Juan Orlando, CPA
Managing Partner
Answer Options to choose from for each *marked sentence:
(*A)
[Original text] The new business, E&K ComputerLand(E&K), will be an accrual basis, calendar-year entity.
- [Delete text]
- The new business, E&K ComputerLand (E&K), will be anaccrual basis, fiscal-year entity.
- The new business, E&K ComputerLand (E&K), will be acash basis, calendar-year entity.
- The new business, E&K ComputerLand (E&K), will be acash basis, fiscal-year entity.
- The new business, E&K ComputerLand (E&K), will be ahybrid basis, calendar-year entity.
- The new business, E&K ComputerLand (E&K), will be ahybrid basis, fiscal-year entity.
(*B)
[Original text] However, to be a Pship, AACS mustliquidate, as it cannot be a partner of E&K; only individualscan be owners in a Pship.
- [Delete text]
- However, to be a C Corp, AACS must liquidate as it cannot be ashareholder of E&K; only individuals can be owners in a small CCorp.
- However, to be a C Corp, you must incorporate your businessbecause AACS, which is a C Corp, cannot combine with a soleproprietorship.
- However, to be an S Corp, AACS must liquidate, as it cannot bean owner of E&K; C Corps cannot be owners in an S Corp.
- However, to be an S Corp, you must incorporate your businessbecause AACS, which is a C Corp, cannot combine with a soleproprietorship.
(*C)
[Original text] S Corps are separate taxable entities,so double taxation can occur when the entity has taxable income anddistributions are made.
- [Delete text]
- C Corps are separate taxable entities, so double taxation canoccur when the entity has taxable income and distributions aremade.
- Pships are separate taxable entities, so double taxation canoccur when the entity has taxable income and distributions aremade.
- C Corps and S Corps are separate taxable entities, so doubletaxation can occur when the entity has taxable income anddistributions are made.
- S Corps and Pships are separate taxable entities, so doubletaxation can occur when the entity has taxable income anddistributions are made.
- C Corps and Pships are separate taxable entities, so doubletaxation can occur when the entity has taxable income anddistributions are made.
(*D)
[Original text] Pships and S Corps are tax reportingentities, meaning the entity level income flows through to theowners and is taxed only once on the ownersâ personal returns.
- [Delete text]
- C Corps are tax reporting entities, meaning the entity levelincome flows through to the owners and is taxed only once on theownersâ personal returns.
- S Corps are tax reporting entities, meaning the entity levelincome flows through to the owners and is taxed only once on theownersâ personal returns.
- Pships are tax reporting entities, meaning the entity levelincome flows through to the owners and is taxed only once on theownersâ personal returns.
-C Corps and S Corps are tax reporting entities, meaning theentity level income flows through to the owners and is taxed onlyonce on the ownersâ personal returns.
- C Corps and Pships are tax reporting entities, meaning theentity level income flows through to the owners and is taxed onlyonce on the ownersâ personal returns.
(*E)
[Original text] With C Corps and S Corps, income andlosses are allocated according to the capital interestaccounts.
- [Delete text]
- With S Corps and Pships, income and losses are allocated on aper-share, per-day ownership basis.
- With C Corps and Pships, income and losses are allocated basedon the initial investments in the entity.
- With S Corps, income and losses are allocated based on thebalances in the ownership accounts.
- With Pships, income and losses are allocated based on theownership agreement, and special allocations are permitted.
- With C Corps, income and losses are allocated by the board ofdirectors.
(*F)
[Original text] This provides more flexibility thanwith Pships, which requires an allocation based on capital interestaccounts.
- [Delete text]
- This provides more flexibility than with C Corps, whichrequires an allocation based on the board of directorâsdeclarations.
- This provides more flexibility than with S Corps, whichrequires an allocation based on per-share, per-day ownership.
- This provides more flexibility than with Pships, whichrequires an allocation based on the ownership accounts.
- This provides more flexibility than with S Corps, whichrequires an allocation based on the ownership agreement.
- This provides more flexibility than with C Corps, whichrequires an allocation based on initial investments in theentity.
(*G)
[Original text] S Corps and Pships have the leastprotection because owners include all liabilities in their basis;whereas a C Corp has the ability to limit liability since ownersare liable only to the extent of their investment.
- [Delete text]
- C Corps have the least protection because upon liquidation,owners must contribute to the entity to the extent of any losses;whereas S Corps and Pships are only liable to the extent ofrecourse debt.
- General Pships have the least protection because there isunlimited liability for the owners; whereas C Corps and S Corpshave the ability to limit liability since the owners are liableonly to the extent of their investments.
- S Corps have the least protection because upon liquidation,owners are liable to the extent of recourse debt; whereas C Corpshave the most protection due to the owners being liable only to theextent of their investment.
- S Corps and Pships have the least protection because ownersinclude all liabilities in their basis; whereas C Corps owners areonly liable to the extent of their investment plus short-term debts(accounts payables).
- C Corps and S Corps have the least protection because to theextent of recourse debt, the owners are liable; whereas Pshipsowners increase their protection by including all liabilities intheir basis.
(*H)
[Original text] However, in S Corps there can only beone class of ownership, and at least one of the owners must be a CCorp.
- [Delete text]
- However, in S Corps there can only be one class of ownership,and the owners must be within the same family or limited extendedgroup.
- However, in S Corps there can only be one class of ownership,and this class must all have the same voting rights
- However, in S Corps there can only be one class of ownership,and revenue cannot be of a passive nature.
- However, in S Corps there can only be one class of ownership,and not more than 75 owners of which none are C Corps.
- However, in S Corps there can only be one class of ownership,and not more than 100 owners of which none are nonresidentaliens.
ADDITIONAL DOCUMENTATION ON NEXT PAGE
ENTITY AGREEMENT DRAFT Incomplete
(Not for legal use; planning purposes only)
THIS AGREEMENT (the "Agreement") made and entered into this__________day of __________,in the year __________(the "ExecutionDate"), among
·Earl Jackson of 48684 Clermont Ave, Flipperville, FL33999,owner of Jackson Computer Sales
AND
·AA Computer Services, Inc. of 2400 Ocean Drive, Flipperville,FL33999, whose sole shareholder is Kathleen Hamilton of 6203 FrontStreet, Flipperville, FL 33999
Thereby set forth their desire to combine Jackson Computer Salesand AA Computer Services, Inc. to create a new entity of E&KComputerLand to be located at 2400 Ocean Drive, Flipperville,FL33999.The ownership percentages will be based on the net fairvalue of the assets contributed to E&K ComputerLand.
Legal Entity
The parties agree that the combination of Jackson Computer Salesand AA Computer Services, Inc. will result in E&K ComputerLand,carrying on business in the form of a __________legal entity withall the rights, privileges and obligations prescribed by the statelaw of Florida. All documents, licenses, and registrationsnecessary to create the legal entity will be filed with the Stateof Florida.
Tax Entity
In accordance with the law of the Internal Revenue Code(IRC),E&K ComputerLand will elect to be taxed asa(n)__________entity and file a Form__________tax return.
Accounting Method:
As required by the IRC, the entity will use the accrual methodfor determining its gross profit from sales of inventory and thecash method for all other aspects of the business, where possible.Valuing inventory will use the lower of cost or market andfirst-in, first-out methods.
Tax Year:
The ending date of the tax year will be determined based on thetax law requirements. If
there are options, March 31 is preferred, followed by June 30and October 31. A calendar year is the least desired.
Notes for Completing Draft
Income:
If the entity created is â
·C Corporation: Earl and Kathleen will receive salaries. Any netincome in excess of reasonable business needs being retained willbe paid as dividends based on common share ownership.
·S Corporation: Earl and Kathleen will receive salaries. Allincome and expenses will be allocated based on tax law with onlycommon stock issued to owners.
·Partnership: Earl and Kathleen will receive guaranteedpayments. All income and expenses will be allocated based on thisagreement. Profit and loss allocations to be based on ownership
percentages with rights to adjust as partners deem necessary. Inaddition, all of the depreciation on the building located at 2400Ocean Drive, Flipperville, FL 33999, will be allocated to Kathleen,and income from initial inventory will be allocated to Earl.
EMAIL From: Kathleen Hamilton [[email protected]]
Sent:Thursday, January 5, 20X1 7:50 PM
To:Juan Orlando
Subject: Re: Combination of Businesses
Hello Juan,
Here is the information you requested about AA Computer Services(AACS).
·Set up as a regular corporation within Florida.
·Files an 1120 tax return with a March 31 year-end with about$300,000 of gross
income.
·Uses cash basis of accounting primarily because it is a servicebusiness.
·For the few sales of products, accrual basis is used.
·AACS has a $300,000 mortgage on its building. Earl will move inhis business here and our new company will be at this location. Noother liabilities.
Iâm not expecting to have to liquidate to combine with Earlâsbusiness. Please let me know if this is not the case.
As requested by the lawyers, I had AACS appraised by Jefferson& Sons. The appraisal came in at $700,000. The formal write-upwith all the details was sent directly to the lawyers, and I hadanother copy sent to you.
As for tax information for me, I just have a salary from AACS,which is basically whatever net income AACS has for the year afterall other expenses. I have some investment income and that isit.
Let me know if you need anything else.
Kathy
EMAIL From: Earl Jackson[[email protected]]
Sent: Friday,January 6, 20X1 4:31 PM
To:Juan Orlando
Subject:Re: Combination of Businesses
Dear Juan,
I just got the appraisal from Jefferson & Sons and theyvalued my business at $500,000. Of course, this does not take intoconsideration that I owe $200,000 on my business loan. They saidthat Kathy Hamilton told them to send a copy of her appraisal andmine to Beach & Sea and Davis, Garcia & Brown, so youshould receive a copy of both at the same time.
You asked about my taxes for Jackson Computer Sales. Most of the$400,000 gross revenue comes from sales of computers, monitors,peripherals, and accessories. I also sell tablets. All of itsincome and expenses have been reported on my personal return on mySchedule C. I pay self-employment taxes on the net amount, whichhas been about $100,000.
If there is anything else you need, just let me know.
Have a great weekend,
Earl
