Question

For C corporations and S corporations, what are some similarities and differences in regards to:

2a. How corporate income is calculated

2b. How corporate income is taxed

2c. Effects of property transfers from shareholder to corporation

2d. How distributions to its shareholders are taxed

Answer 1

There is double taxation when dividend distribution is done to shareholders in C Corporation because it pays tax on EBT and dividend tax as well. Same is not with S Corporation

There is a restriction on transfer of shares or asset from shareholders to Corporation or vice versa in S Corporation. The restrictions are limited in C Corporation.

The losses of S Corporation pass through to its shareholders who can use losses to offset income

C Corporation has lower maximum tax rate. The rate has been lowered to 21% which is an added advantage to C Corporation