BUS 415 Week 4 - DQ 2 - 7471

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Wk 4 dq 2…Define and explain the difference between the "C" and "S" corporation. 

A “C” corporation is a business term that is used to distinguish this type of entity from others, as its earnings are taxed separately from its owners under subchapter C of the Internal Rev Code. In an “S” corporation, the profits are passed on to the shareholders, and are taxed based on personal returns. This is done under subchapter S of the Internal Rev Code.

All corporations begin their lives as a C corporation. The owners can elect to become an S corporation by filing a form 2553. This new status allows the owners to be taxed like a partnership or a sole proprietorship. The income of the corporation "passes through" to the owners without the corporation being taxed. Otherwise, a double taxation would exist whereby both the owners and the corporation would be taxed. The S corporation does come with additional limitations, though, namely a shareholder limit of 75 and U.S. citizenship and residency requirement for shareholders.

 

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Wk 4 dq 2…Define and explain the difference between the "C" and "S" corporation. 

A “C” corporation is a business term that is used to distin