C Corporations

"C" corporations are those which are taxed by the Internal Revenue Service as a regular corporation and pay income tax based upon corporation tax rates. If a corporation does not qualify for "S" corporation status to be taxed as a small business, then it must be treated as a "C" corporation. The decision to be a "C" corporation is one of default - a corporation is automatically a "C" corporation unless it obtains approval from the Internal Revenue Service to be taxed under a different provision. If the corporation will offer it's stock to the public via a stock exchange, or if there are stockholders who are not U.S. citizens, for example, it would not qualify as an "S" corporation. Limited Liability Companies are not part of this discussion because they are taxed as partnerships and enjoy pass-thorough taxation similar to "S" corporations but without the restrictions, including the number and qualification of shareholders. (Please see applicable sections for "S" corporations and LLCs for more details.)

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