sellin Tony and Susan are starting a retail businessg

76. sellin Tony and Susan are starting a retail businessg formal wear for men and women.
They estimate profits and losses for the next five years to be: ($20,000), ($10,000),
($5,000), $10,000, and $50,000 respectively. Susan will work full time in the store
while Tony will be involved in managing the operations. Susan is married to Tom and
is in the 28% marginal tax bracket. Tony is single and has other sources of income that
put him in the 28% marginal tax bracket. Susan will be paid a salary of $30,000 for
the first five years, after which her compensation will be reviewed. Tony and Susan
each contribute $50,000 to get the business started. The remaining question facing
Tony and Susan is which business form to use for the business. They believe they
should operate as a partnership but have been informed that forming a corporation
might be a better option since it would limit their liability. Prepare an analysis to
determine whether Tony and Susan should operate their business as a partnership or a
corporation.

77. Tory, Becky, Hal, and Jere form TBHJ Partnership as equal owners. TBJH Partnership
rents heavy tools and equipment. Becky and Hal are married to each other while Tory
and Jere are brothers but are not related to Becky or Hal. Because Becky and Hal have
other jobs, Tory and Jere are to be the full-time managers of the business. Although Tory
and Jere will run the business full-time, Becky will help in the store on weekends and some
evenings. Hal will lend his financial expertise to the firm by doing the bookkeeping and
preparing the tax returns. Even though the four have equal ownership interests, it is not
clear how each owner is to be compensated so that there is equity among the partners yet
rewards for those engaged in specific tasks. Hal has told the others that they cannot
receive deductible salaries. However, he suggests that guaranteed payments be made to
each partner/employee for an agreed-upon amount based on the value of the services each
provides and/or the time spent at the store. Discuss the ramifications of employing this
plan and whether this is an equitable way to allocate compensation among the partners.
What are the implications of this arrangement for the partners and the partnership?