Choice of Entity – S Corporation 1120S

General information: An S Corporation is a business entity that, although legally a corporation, elects to be taxed under Subchapter S of the Internal Revenue Code. This election allows the corporation’s income, losses, deductions, and credits to “pass through” to its shareholders rather than being taxed at the corporate level. In effect, profits are taxed only once on the individual shareholders’ returns rather than both at the corporate level and again when distributed as dividends.

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