S Corporation

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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.
References in periodicals archive ?
The terms C-corp and S-corp pertain to federal taxation chapters in the Internal Revenue Code.
Relief from this double-taxation is available for eligible corporations by filing an election with the IRS to be taxed as an "S-corp."
It finds that banks with higher risk and banks that are not owned by a BHC have higher capital ratios, but that no economically significant relationship exists between capital holdings and S-corp banks.
The Senate is poised to begin debate on its own student loan bill the week of May 7; however, their version of an extension would be funded by raising taxes on some S-Corps. S.
For S-corp. owners, the only way to vary compensation paid to principals owning equal shares of business is to fix their salaries at different levels.
"While S-elected LLCs are not new, many business owners believe that they have to choose between the tax incentives of a S-Corp and the ease of an LLC.
* How do tax practitioners explain to their clients (who own an S-Corp) the application of two seemingly contradictory rules, with one rule being that employers must pay and withhold employment taxes and a different rule being that distributions from S-Corporations to its shareholders are not subject to federal employment taxation?
Grog Jolivette (R-Hamilton) was expanded in the Senate and approved in the House to include, among others, changes in the taxation of S-Corp. income at the municipal level.
Although it is fairly easy to move from an S-Corp to a C-Corp, doing the reverse is more difficult.
For an S-corp shareholder with insufficient basis to deduct corporate losses, a distribution from a qualified plan (or an IRA) could be loaned to the corporation and free up at-risk losses with the only tax cost being the 10-percent penalty.
Made by La Isha (an S-Corp), Greenwood Village, (303) 601-7284, www.la-isha.com.
Health Insurance Deductibility: Health insurance expenses for S-corp owners and Schedule C filers should be fully deductible as a business expense with no limits.