Examples of S corporation in the following topics:
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- S corporations elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes.
- S corporations elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes.
- S status combines the legal environment of C corporations with partnership-like federal income taxation.
- Like a C corporation, an S corporation is generally subject to the laws of the state in which it is organized.
- In order to be eligible for S corporation status, a corporation must meet certain requirements:
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- Four main types of corporations are designated as C, S, limited liability companies, and nonprofit organizations.
- A C corporation is distinguished from an S corporation, which generally is not taxed separately.
- S corporations are merely corporations that elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes.
- Like a C corporation, an S corporation is generally a corporation under the law of the state in which the entity is organized.
- For federal income tax purposes, however, taxation of S corporations resembles that of partnerships.
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- S corporations are merely corporations that elect to pass corporate income, losses, deductions, and credit through to their shareholders for federal tax purposes.
- S status combines the legal environment of standard corporations with U.S. federal income taxation similar to that of partnerships.
- As with partnerships, the income, deductions, and tax credits of an S corporation flow through to shareholders annually, regardless of whether distributions are made.
- Payments to S shareholders by the corporation are distributed tax-free to the extent that the distributed earnings were previously taxed.
- Also, certain corporate penalty taxes (e.g., accumulated earnings tax, personal holding company tax) and the alternative minimum tax do not apply to an S corporation.
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- Although vastly outnumbered by sole proprietorships and partnerships, most of the largest companies in the U.S. are C corporations.
- In exchange for this luxury, rules are placed on the types of corporations that can elect S status:
- An LLC, like an S corporation, is a hybrid entity having certain characteristics of both a corporation and a partnership or sole proprietorship.
- It differs from an S corporation in that there are no restrictions on the number or types of shareholders.
- This graph shows the effect of corporate tax rates in the U.S. from 1947 through 2012.
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- For instance, the U.S. government has little risk of default, and investors call U.S. securities default-risk-free instruments.
- Economists call the difference between the interest rate on the U.S. government bonds and corporate bonds the default risk premium.Investors add default risk premium to a risk-free investment, so they can invest in "risky" bonds because they earn a greater return.
- Rating companies such as Standard & Poor's Corporation and Moody's Investor Service assess the default risk for corporations.
- Unfortunately, a corporation could have financial trouble, so investors believe the corporation could default.
- Consequently, corporations pay greater interest rates for their bonds while the U.S. government pays a lower interest rate.
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- Government corporations are revenue generating enterprises that are legally distinct from but operated by the federal government.
- A government-owned corporation, also known as a state-owned company, state enterprise, publicly owned corporation, or commercial government agency, is a legal entity created by a government to undertake commercial activities on behalf of the government.
- In addition to the financial sector GSEs, the U.S. government has chartered corporations that are legally distinct from the government (unlike federal agencies) but that provide public services.
- Corporations in this category include the Corporation for Public Broadcasting, the National Fish and Wildlife Foundation, The National Park Foundation, and many others.
- Lastly, the government sometimes controls government acquired corporations--corporations that were not chartered or created by the government, but which it comes to possess and operate.
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- Historically, corporations were created by a charter granted by government .
- Corporations generally have a distinct name.
- Some corporations choose not to have a descriptive element.
- Incorporated, limited, and corporation, or their respective abbreviations (Inc., Ltd., Corp. ) are the possible legal endings in the U.S.
- Usually, there are also corporate bylaws which must be filed with the state.
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- In the 1970s, for instance, U.S. auto-makers were slow to recognize that rising gasoline prices were creating a demand for smaller, fuel-efficient cars.
- Because corporate stock is transferable, a corporation is not damaged by the death or disinterest of a particular owner.
- By the mid-1990s, more than 40 percent of U.S. families owned common stock, directly or through mutual funds or other intermediaries.
- The CIO came onto the corporate scene as high technology became a crucial part of U.S. business affairs in the late 1990s.
- The U.S.
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- This document should mention that it will import shoes from other countries and distribute them throughout the U.S.
- Incorporation is the formation of a new corporation.
- Incorporated, limited, and corporation, or their respective abbreviations (Inc., Ltd., Corp. ) are the possible legal endings in the U.S.
- Some state laws are particularly corporate-friendly.
- Also, they can own shares in other corporations and receive corporate dividends 80 percent tax-free.
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- A corporation has limited liability.Stockholders own the corporation, and they are not liable for a corporation's debt.If a corporation fails, subsequently, the stockholders only lose their investment, the amount of common stock that they had purchased.
- Stockholders do not have a mutual agency relationship, where the stockholders cannot bind a corporation to contracts.Stockholders have no say in the daily operation of the corporation even though they own the corporation.
- Protected Preferred Stock – a corporation must deposit part of its profits into a fund, and, thus, the corporation can guarantee dividend payments to preferred stockholders.
- Corporations can buy other corporations.For instance, a parent corporation can have many subsidiaries, and the parent company does not fully integrate the subsidiaries into the parent corporation.Corporations develop these complex structures because of lawsuits, taxes, and regulations.Unfortunately, lawsuits are common and excessive in the U.S.If a successful lawsuit bankrupts a subsidiary, only that subsidiary is impacted.For example, a judge sued a dry cleaner for $65 million because the dry cleaner lost his pants.Although the dry cleaner foundthe judge's pants a week later, the lawsuit bankrupted the dry cleaner.In another example, a corporation owns 10 different apartment complexes.A corporation establishes each apartment complex as a separate, legal entity.If a tenant is injured on one property, he or she can sue the complex that limits the lawsuit to one subsidiary.
- Your return from your Facebook investment is the dividend yield plus the capital gain, or 16.1%.Corporate managers can influence the dividend yield that ranges approximately 2% per year while they have little influence on the capital gains that could range as high as 12% per year.Unfortunately, investors could face catastrophic losses if a stock market quickly plummets during a downturn in an economy.For example, the U.S. stock markets dropped half in value during 2008, and many internet stocks became worthless during 2000 as the stock from internet companies plummeted.Consequently, investors could earn capital losses if they sell their stock as it falls in value, or the corporation bankrupts.