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If a corporation that has elected to be treated as an S corporation ceases to meet the requirements (for example, if as a result of stock transfers, the number of shareholders exceeds 100 or an ineligible shareholder such as a nonresident acquires a share), the corporation will lose its S corporation status and revert to being a regular C ...
The book restates Kelso's thesis concerning productivity and broad access to capital, and discusses a number of policy suggestions, such as requirements for corporations to make monthly pay-outs of their entire pre-tax income to shareholders, which would then be taxed as ordinary income rather than capital gains. [29]
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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]
The IRS uses the information entered on the form to establish the entity's filing and reporting requirements for federal tax purposes. [3] Certain domestic and foreign entities that were in existence before January 1, 1997, and have an established federal tax classification generally do not need to make an election to continue that classification.
Self-employed persons are usually ineligible, as are S-corp owners. [18] "Highly compensated" participants may be subject to "certain limitations." A sole proprietor can employ a spouse who actually helps the business. The employer would need to establish a W-2 to make the spouse's employment legitimate.
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