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Subchapter S (S Corporation)
       
 
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Subchapter S (S Corporation)

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Subchapter S (S Corporation)
A Corporation that meets the requirements for, and has made a proper election to be taxed under, Subchapter S of the Internal Revenue Code.
    
This gives the Corporation the Option of being taxed as if it were a partnership (income is taxed to the shareholders, rather than to the Corporation itself). This gives a Corporation with 100 shareholders or less the benefit of incorporation while being taxed as a partnership. This means that any profits earned by the Corporation are not taxed at the corporate level, but rather at the level of the shareholders. Also known as "S Corporation".
    
Having S Corporation status can prove a huge benefit for a Corporation. The Corporation can pass income directly to shareholders and avoid the double taxation that is inherent with the dividends of public companies, while still enjoying the advantages of the corporate structure. In order to qualify, a Corporation must be a small business Corporation. The  requirements  to qualify are  that it must be a domestic Corporation, it should not have more than 100 shareholders, should have only one class of stock and only include  eligible shareholders.
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