"C" Corporations


Corporations are the oldest form of business entity which are treated as separate persons for liability and tax purposes.  While it is possible for certain corporations to be treated as "pass through" tax entities (such as "S corporations" and, to a certain extent, both real estate investment trusts and regulated investment companies), the default tax treatment for a corporation is as a "C corporation" (a separate taxpaying entity).  Not only is the "C corporation" a separate taxpayer, it also has a separate set of tax rates, deductions, credits, and other laws and regulations applicable solely to it.  Over the years, many of the benefits which were formerly available solely to C corporations have been given to other business entities; nevertheless, there are a number of remaining C corporation benefits, including:

The biggest drawback for the C corporation is "double taxation," whereby earnings which have been taxed at the corporate level will be once again taxed at the shareholder level when distributed as dividends.