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Forming and liquidating entities

TCP Chapter 12 · Area III · Blueprint III.A

Choosing the right entity is one of the most valuable pieces of advice a tax adviser gives. The same business can be a sole proprietorship, a partnership or LLC, an S corporation or a C corporation, and the choice changes what happens when property goes in, how profits are taxed each year and what it costs to get out. The Blueprint asks you to identify entities from their legal features, build schedules comparing formation and liquidation across entity types, and derive which choice is better. Tessa and Leo help Jordan Lee and Camila Torres, who are turning their bakery, Copper Kettle, into a real company. Figures are for 2026.

In this chapter

  1. Identifying the entity from its legal features
  2. The tax profile of each entity
  3. Forming with noncash property: a comparison schedule
  4. Deriving the best entity for the owners
  5. Liquidating: comparing entity types
  6. Converting from one entity to another

This chapter has 6 lessons, 50 practice MCQs with explanations and 20 simulations, plus flashcards and a recall sheet.

What this chapter covers

Chapter 11: Tax-exempt organizations · Chapter 13: Tax planning for C corporations