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Like everyone else, I am concerned about making and saving money. Unfortunately, there are no easy solutions and the decisions we make require careful contemplation. Stress arises when we do not have all of the information we need to make an informed decision or when we do not understan

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

d the information that is presented. My friends, I will attempt to shine some light on the process I use to determine appropriate use of the subchapter S corporation. Warning, this article might contain information that is boring and sleep inducing. Please do not read this article while

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

driving and avoid operating heavy machinery.

Let's start by defining what a subchapter S corporation represents. The entity is formed at the state level and serves to provide liability protection for its owner or owners. After the entity is formed, the decision is made to become a S c

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

orporation. This is a tax election. One files form 2553 with Internal Revenue by the 15th day of the third month of a given year and is afforded S corporation status for this year. As opposed to a C corporation (a taxable entity in and of itself), earnings from the S corporation flow th

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

rough to its shareholders avoiding any corporate level tax. These flow-throws avoid the implementation of self-employment taxes (or SE tax) making it seem quite beneficial to would be taxpayers. As with many situations in the world of income tax, beauty is only skin deep leading us to a

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

world of tax traps and audit magnets. What is a business owner to do when faced with making the decision to be a S corporation? The business owner should be listening to my show, "Better Business" as well as reading all of my articles to best inform himself of what lies ahead. As alway

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

s, you are invited to get clarification of what I discuss through my articles or through my radio program (see below on how to get your questions answered for free).

If I am going to form a new business, I will first assess the need to limit liability. If I decide to form an entity at

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

ll, I will then decide on the best form for business and income tax considerations. The S corporation is good for single owners and situations where it is practical to allocate income and losses based on ownership percentages. Let's use the example of you and I forming a business entity

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

and owning it on a 50/50 footing. We might set our salaries at $50,000 each with additional earnings allocated to us on a 50/50 basis. This will work fine as long as we both agree that we have the same value to the business. But what if you do more work than I do? Well, you could take

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

more salary possibly and then we could split any remaining earnings 50/50. We could however, get to the point where we are taking out salary to balance our improprieties thus defeating one of the purposes of electing S status in the first place. Please give careful consideration as to w

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

ho the owners will be and how profits and losses will be divided.

What about deducting losses incurred at the S corporation level on the personal returns of its shareholders?Is this allowable? I just read an article that said you can do this very thing. I caution you to beware. There i

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

s such a concept as basis limitation. If it is projected that losses will result in the first few years of operation, one must have basis in order to deduct these losses personally. Basis in subchapter S stock will consist of capital contributions such as stock and loans made by the sha

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

reholder or shareholders directly to the entity. We cannot simply personally guarantee the loans and have the proceeds then deposited in the S corporation. If we are going to borrow money to loan to the entity, we must do so personally and then transfer the proceeds from our personal a

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

ccounts to the S corporation accounts. This will then give us basis to take losses. Now I think it is important to mention here that as we repay these loans to ourselves, we will have to pick up income on our personal returns either as ordinary or capital gain income. If we put the proc

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

eds in as capital stock or paid-in capital , we will not have to worry about recapturing this income as we will not be permitted to get the funds repaid. If this does not suit our needs, we may be better off forming a partnership or sole proprietorship.

There are many other instances t

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

hat one should be made aware of while considering the formation of a S corporation. The S corporation is not permitted to provide fringe benefits to more than 2% owners of the entity. If one is looking for deductible fringe benefits, look to the C corporation as a possibility. If one e

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

xpects to be very profitable right out of the gate, the S corporation can provide protection against unreasonable compensation charges that might be assessed against a C corporation and can provide SE tax savings that might otherwise be levied against sole proprietorship earnings. If a

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

corporation wishes to make the S election after having operated as a C corporation, it will need to have its assets valued as of the date the entity first operates as a S corporation. This will identify assets that have what is known as, "built-in gains". If any of these assets are sold

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

during the next ten years, they will trigger corporate level tax even though the entity has elected S corporation status. If one is going to convert from C corporation to S corporation, seek competent professional help to make certain that assets are valued properly and that their valu

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

es are allocated appropriately.

In the future, I will add more information regarding S corporations to my collection of ezine articles and I invite you to visit my website at www.mwibonline.com and you are always welcome to the most complete business program on radio, "Better Business"

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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You don't have to be a tech geek to know that Web 2.0 has completely changed the way things work online. If you wise up to these trends, you can easily use them to your advantage.

With the credit card industry developing at such unprecedented rate, more and more people are experiencing the so-called credit card hype. In fact, in the U.S. alone, the average household gets to receive at least two credit card applications in a day.

Currency prices in the Forex markets are determined by a great number of factors influencing the value of the currency being traded.

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