Chapter 9 Objectives

1. Explain how the net profit or loss from a sole proprietorship affects the owner's taxable income.

2. Describe the legal requirements for the home office deduction.

3. Compute the FICA payroll taxes and describe the employer's responsibility for remitting these taxes to the federal government.

4. Describe the tax base and the tax rate for the federal SE tax.

5. Distinguish between a general partnership and a limited partnership.

6. Differentiate between a partner's distributive share of partnership income and cash flow from the partnership.

7. Adjust the basis in a partnership interest to reflect the information reported on the partner's Schedule K-1.

8. Apply the basis limitation rule to determine the current year deduction for distributive shares of partnership loss.

9. Explain how limited liability companies (LLCs) are treated for federal tax purposes.

10. Determine if a corporation is eligible to be an S corporation.

11. Contrast the basis limitation rule for S corporation losses with the basis limitation rule for partnership losses.