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An S corporation (or S Corp), for United States federal income tax, is a closely held corporation (or, in some cases, a limited liability company (LLC) or a partnership) that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. [1] In general, S corporations do not pay any income taxes.
Corporations with assets exceeding $10 million must complete a detailed 3 page reconciliation on Schedule M-3 [30] indicating which differences are permanent (i.e., do not reverse, such as disallowed expenses or tax exempt interest) and which are temporary (e.g., differences in when income or expense is recognized for book and tax purposes ...
Watson, Garrett and William McBride, "Evaluating Proposals to Increase the Corporate Tax Rate and Levy a Minimum Tax on Corporate Book Income," FISCAL FACT (Tax Foundation, No. 751 Feb. 2021) United Kingdom. Tolley's Corporation Tax, 2007-2008 ISBN 978-0-7545-3273-6
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The U.S. federal effective corporate income tax rate is lower than the highest nominal rate, which can be significant in part because of tax shelters such as tax havens. [ 38 ] [ 39 ] Main articles: Corporate tax in the United States , S corporations , and Partnership taxation in the United States
This summary is based largely on the summary provided by the Congressional Research Service, a public domain source. [1]The Permanent S Corporation Built-in Gains Recognition Period Act of 2014 would amend the Internal Revenue Code of 1986 to reduce from 10 to 5 years the period during which the built-in gains of an S corporation are subject to tax and to make such reduction permanent.
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It combines the simplicity and flexibility of an LLC with the tax benefits of an S-corporation (self-employment tax savings). [28] Some legal scholars argue that corporate income taxes are intended to limit the power of corporations and to offset the legal benefits corporations enjoy, such as limited liability for their investors. [29]