Glossary: "C" Corporation

"C" Corporation

"C" Corporation - A "C" corporation is a company whose income will be taxed twice. Its corporate earnings are first subject to corporate income tax. Then, if the corporation distributes some of those same corporate earnings from its retained earnings by paying a dividend to its shareholders, the dividend is subject to personal taxes on each shareholder tax return. In effect, this is the infamous double taxation. President George W. Bush has proposed doing away with this double taxation. The "C" in the term "C" corporation refers to Subchapter C of the Internal Revenue Code. Absent a timely election to be taxed as an "S" corporation, your corporation will be taxed automatically as a "C" corporation.

Disclaimer: The foregoing is intended to provide general information and may not be suitable in specific instances. The glossary information is not intended to be exhaustive, but rather to illustrate typical considerations. The material is provided with the understanding that it is not legal, accounting, tax or any other professional advice.

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