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which is filed on a form provided by the I.R.S. normally immediately after incorporation, which election can be withdrawn before the beginning of a future taxable year.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.

N.H. tax policy hurts small business

Conversely, Subchapter S corporations generally do not pay tax on profits.

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Sid and Al Ruckriegel were 50% shareholders in Sidal Inc., a subchapter S corporation, set up in Indiana.

When payments to an S corporation don't create basis

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.

State income taxes and S-Corporations--the saga continues

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.

For sale? How have unprecedented metals prices affected the value of your company?

Another Subchapter S Corporation Tries to Follow in Footsteps

Taxation

Subchapter S corporations are still prohibited from issuing more than one class of stock under the new law.

Subchapter S corporations gain big under new tax laws

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.

The limited liability company in seven easy lessons: a tax executive's primer

Mike Kopetski, a first-term Oregon Democrat, wants to increase the shareholder limit on subchapter S corporations from 35 to 50.

Raising the shareholder ceiling

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.

Why private companies stay private: the FEI research foundation asked senior financial executives of five privately held companies to tell why they stay private. Here's what they said. (Private Companies)

significantly liberalizes subchapter S corporation rules, clarifies certain worker classification rules and simplifies and expands retirement plan benefits.