|
"S"
Corporation |
"C"
Corporation |
| Profits |
Taxed on shareholder's personal tax
returns. |
Subject to corporate
tax rates. |
| Dividend Distributions |
Those were already taxed as profit
(see above) so they are not taxed again. |
Subject to personal income tax. |
| Operating Losses |
Can be used as a tax deduction on
the shareholder's individual tax returns assuming shareholder is a
material participant. |
Can be "carried back" two
years, or carried forward 20 years, but can only be applied
against corporate profits. |
| Capital Gains |
Subject to only tax at the
individual level. Maximum rate for long term gains is 20%. |
Subject to corporate tax rate, up to
35%. |
| Capital Losses |
Flows through to the individual tax
return of the shareholders and is netted with other capital gain
and loss transactions, deductible up to $3,000 per year with the
balance carried forward indefinitely. |
Only allowed to the extent of
capital gains: No current loss allowed. Permitted to be
carried back three years and forward only for five years. |
| Health Insurance Premiums |
Not permitted as a corporate
deduction for a 2% or more shareholder. IT IS permitted as
an "adjustment" to income "above the line" on
the shareholder's individual income tax return. |
Deductible if corporate health
insurance plan is non-discriminatory. |