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S Corporation
(redirected from Subchapter S corporation)

   Also found in: Legal, Acronyms, Wikipedia 0.01 sec.
S Corporation
A corporation that elects not to be taxed as a corporation. That is, the corporation does not directly pay federal income tax on its earnings. Similar to a partnership, it passes its income or losses and other tax items on to its shareholders.

S Corporation
A business with few shareholders that is exempt from some taxes levied on other corporations. Specifically, an S corporation is not responsible for taxes on its profits (corporate taxes) and is taxed as if it were a partnership. However, it may have no more than 100 shareholders. An S corporate structure allows a company to take advantage of some of the benefits of incorporation without all of the responsibilities attached to it.


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A Subchapter S Corporation requires forming a corporation with the state then making an election to be taxed as an S Corporation (pass-through taxation) with the IRS.
Conversely, Subchapter S corporations generally do not pay tax on profits.
Overview of the Subchapter S Corporation Designation Although the term Subchapter S Corporation sounds as if it applies to a certain type of company, in actuality, it is merely a term used by the IRS (Internal Revenue Service) to designate a particular tax status.
 
 
 
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