subchapter S corporation


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subchapter S corporation

n. the choice by a small corporation to be treated under "subchapter S" by the Internal Revenue Service, which allows the corporation to be treated like a partnership for taxation purposes. This may provide the benefit of passing losses (particularly in the early development of the business) to the stockholders. Technically the term "subchapter S corporation" is a misnomer since it is a normal corporation except for the election (choice) which is filed on a form provided by the I.R.S. normally immediately after incorporation, which election can be withdrawn before the beginning of a future taxable year. This election is usually prepared and filed with the I.R.S. by the company's accountant and not the incorporating attorney. (See: corporation)

References in periodicals archive ?
The Subchapter S corporation and LLC by IRS code is supposed to be a pure flow through of profits and not taxed like a C corporation, which is taxed at the corporate level and then a dividend tax if dividends are made.
A Subchapter S Corporation is a closely held entity (no more than 100 shareholders) that makes a tax election so as to avoid double taxation, once at the corporate level and once at the shareholder level.
Many of these businesses were incorporated 20 to 30 years ago when limited liability corporations (LLCs) did not exist or were unpopular and Subchapter S corporations had other disadvantages.
Another Subchapter S Corporation Tries to Follow in Footsteps
Although the LLCs combination of limited liability and tax savings is in some ways similar to the benefits afforded by a Subchapter S corporation or a limited partnership, the LLC is in many respects a very distinct and more flexible structure rather than the simple mixing of corporate benefits with partnership tax treatment.
By qualifying as a Subchapter S corporation, Hemet Bancorp would substantially eliminate its corporate level income tax liability.
The company is organized as a Subchapter S corporation, which limits its number of shareholders to 75, and taxes them in a manner similar to a partnership.
1502-32 is adapted from the method of calculating basis adjustments for partnership interests and shares in a Subchapter S corporation.
Lawer Corporation, also known as Nelson Adams, a privately-held subchapter S corporation with headquarters in Corona, California.
significantly liberalizes subchapter S corporation rules, clarifies certain worker classification rules and simplifies and expands retirement plan benefits.