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 ?
Note the breathtaking implications if in the future this decision is extended beyond Subchapter S corporations, to include other business arrangements, such as partnerships, individual proprietorships, or limited liability corporations where there are pass-throughs of tax liability.
Many Subchapter S corporations are locked into elections made years ago; while they would prefer to adopt the tax-favored partnership form, they cannot without a heavy tax toll charge.
A new Treasury Inspector General for Tax Administration (TIGTA) report, titled "The Internal Revenue Service Does Not Always Address Subchapter S Corporations' Officer Compensation during Examinations," may signal the beginning of a new Service position on the compensation issue.
These figures included companies that had zero earnings as well as Subchapter C and Subchapter S corporations. (Subchapter S corporations have 35 or fewer shareholders and enjoy special tax advantages; Subchapter C corporations are regular corporations.)
Under the SBJPA, the law governing subchapter S corporations underwent numerous changes, one area of which will open up new estate planning opportunities for CPAs concerning the types of trusts allowed to hold S corporation stock.
(63) See Joint Committee on Taxation, Law and Proposals Related To Subchapter S Corporations and Home Office Deductions (JCS-16-95), 5/24/95, Table 3.
As a result, the only firms represented are individual proprietorships, partnerships and Subchapter S corporations. Many of the larger black Subchapter C corporations were left out of the report altogether, a fact that leaves the validity of the census report open to debate.
Part of the problem with the Census Bureau report is its use of administrative data which includes only individual proprietorships, partnerships and Subchapter S corporations. Many larger firms are Subchapter C corporations and are not captured in the Census data.
(2) Joint Committee on Taxation, Present Law and Proposals Relating To Subchapter S Corporations and Home Office Deductions (JCS-16-95), 5/24/95, Table 3.
"Any hopes have been dashed," he said, "by nex taxes and the potential for additional health care costs." He added, "I just received a notice from a supplier announcing that it had raised prices for the first time in four years specifically because of higher taxes on subchapter S corporations." He concluded, "The NFIB's growth forecast for the second half of the year might be on the optimistic side."