C Corporation


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C Corporation

A corporation that elects to be taxed as a corporation. The C corporation pays federal and state income taxes on earnings. When the earnings are distributed to the shareholders as dividends, this income is subject to another round of taxation (shareholder's income). Essentially, the C corporations' earnings are taxed twice. In contrast, the S corporation's earnings are taxed only once.

C Corporation

A business that is legally completely separate from its owners. Most publicly-traded companies (and all major ones) fall under this classification. For United States tax purposes, C corporations are required to pay income taxes on their profits. The advantage to a C corporate structure is the fact that, unlike S corporations, there is no limit to the number of shareholders. A disadvantage is the fact that, because a C corporation is taxed itself and its individual shareholders are taxed on dividends, it is subject to double taxation.
References in periodicals archive ?
1363(d) will apply, and recapture of LIFO benefits will be triggered, if two conditions are met: (1) a C corporation elects S status under Sec.
Continuing on with the statute's plain language, a C corporation converting to S status needs only to recapture its "LIFO recapture amount," which is defined as the difference between the value of an inventory asset as it would have been valued using the FIFO method and its value using the taxpayer's LIFO method.
1374 was amended to prevent the potential circumvention of the corporate level of tax on the distribution of appreciated (built-in gain) assets by a former C corporation that held such assets at the time of its conversion to an S corporation.
1374 was not being achieved for former C corporations that used LIFO; a taxpayer that experienced rising acquisition costs would seldom, if ever, experience a decrease in its LIFO reserves.
Without such relief, C corporations sponsoring ESOPs would effectively be prevented from maintaining a SESOP after converting to S status, because they would be required to make in-kind distributions of employer securities and could quickly violate the 75-shareholder requirement.
Subchapter C applies to C corporations and, generally, to S corporations (under Sec.