- C corporation
A C corporation (or C corp.) is a
corporation in the United States that, for Federal income tax purposes, istax ed under usc|26|11 and Subchapter C (usc|26|301 et seq.) of Chapter 1 of theInternal Revenue Code .A C corporation may also be subject to a separate Federal income tax called theAlternative Minimum Tax .] Most major companies (and many smaller companies) are treated as C corporations for Federal income tax purposes.History
C corporation vs. S corporation
The income of a C corporation is taxed, whereas the income of an
S corporation (with a few exceptions) is not taxed under the Federal income tax laws. The income, or loss, is applied, Pro Rata, to each Shareholder and appears on their tax return as Schedule E income/(loss).Unlike corporations treated as
S corporation s, a corporation may qualify as a C corporation without regard to any limit on the number of shareholders, foreign or domestic.teps to forming a C corporation
According to Nolo, a prospective creator of a C corporation mustcite web |author=Nolo |title=How to Form a Corporation |url=http://www.nolo.com/article.cfm/objectID/AD86F4EA-019E-428F-8EE70B9C0E5C3821/111/182/241/ART/ ]
# Choose an available business name that complies with their state's corporation rules;
# Appoint the initial directors of their corporation;
# File formal paperwork, usually called "articles of incorporation," and pay a filing fee that ranges from $100 to $800, depending on the state where they incorporate;
# Create corporate "bylaws," which lay out the operating rules for their corporation;
# Hold the first meeting of the board of directors;
# Issue stock certificates to the initial owners (shareholders) of the corporation; and
# Obtain licenses and permits that may be required for their business.Impact
Since corporations are state entities and the C corporation status refers to the tax treatment of these corporations by the federal government, the C corporation's impact is mostly relegated to the tax realm. The impact of
double taxation , the taxation of the corporation's income and the separate taxation on theirdividends , constitutes the impact of the C corporation treatment. C corporations are subject to this double taxation unlike S corporations and most other business entities taxed by the federal government.Taxable income list
As of February 2006, the IRS lists the following
tax rate schedule for " [m] ost corporations", except "qualified personal service corporations" and certain other casescite web |author=Department of the Treasury,Internal Revenue Service |title=Publication 542 |url=http://www.irs.gov/pub/irs-pdf/p542.pdf |month=February | year=2006|format=PDF] :Notes and references
ee also
*
Blocker corporation
*S corporation External links
* [http://www.nolo.com/article.cfm/ObjectID/B6061AF8-E1FE-43D9-B3117C83BD1CCA82/catID/B491956E-A152-424B-A2342A5861B5EACF/111/182/241/FAQ/ Corporations FAQ at nolo.com]
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