C-Corp Explained

A C-Corporation is separate and distinct from its shareholders, in that it is subject to income tax on its income.


The income and loss from the corporation do not pass through to the owners.


The famous double taxation applies to the C-Corp:


The entity pays tax on its income.


And afterward, the shareholders are subject to pay income tax on the dividends the Corporation issues to them as shareholders of the Corporation.


?Some points on the C-Corp:


? Dividends paid to shareholders are not an expense to the corporation and therefore do not lower the taxable income of the corporation.


? The income that is subject to tax is not based on what is distributed from the corporation but what is the net income which is revenue minus expenses.


? Shareholder-employees can receive a salary, but there is the FICA tax of 15.3% that will be paid out between shareholders/employees.


Have a question about this or another tax-related matter? Feel free to reach out!


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Moshe Mindick, CPA

Tax Strategist || Wealth Management || Business Building || Fractional CFO || CPA Firm Running || Helping Financial Advisors Become the CPA Their Clients Deserve with Co-Sourced Tax Prep & Tax Strategy

1 年

Would you allow a shareholder 100% owner to take a loan so they can use to pay off a personal mortgage ?? and just pay it back with a lower interest rate?

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