C corporation

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A C corporation (or C corp.) is a corporation in the United States that, for Federal income tax purposes, is taxed under 26 U.S.C. § 11 and Subchapter C (26 U.S.C. § 301 et seq.) of Chapter 1 of the Internal Revenue Code.^[1] Most major companies (and many smaller companies) are treated as C corporations for Federal income tax purposes.

1 History
2 C corporation vs. S corporation
3 Steps to forming a C corporation
4 Impact
5 Taxable income list
6 Notes and references
7 See also
8 External links

[edit] History

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[edit] C corporation vs. S corporation

The income of a C corporation is taxed, whereas the income of an S corporation (with a few exceptions) is not taxed under the Federal income tax laws. The income, or loss, is applied, Pro Rata, to each Shareholder and appears on their tax return as Schedule E income/(loss).

Unlike corporations treated as S corporations, a corporation may qualify as a C corporation without regard to any limit on the number of shareholders, foreign or domestic.

[edit] Steps to forming a C corporation

According to Nolo, a prospective creator of a C corporation must^[2]

Choose an available business name that complies with their state's corporation rules;
Appoint the initial directors of their corporation;
File formal paperwork, usually called "articles of incorporation," and pay a filing fee that ranges from $100 to $800, depending on the state where they incorporate;
Create corporate "bylaws," which lay out the operating rules for their corporation;
Hold the first meeting of the board of directors;
Issue stock certificates to the initial owners (shareholders) of the corporation; and
Obtain licenses and permits that may be required for their business.

[edit] Impact

Since corporations are state entities and the C corporation status refers to the tax treatment of these corporations by the federal government, the C corporation's impact is mostly relegated to the tax realm. The impact of double taxation, the taxation of the corporation's income and the separate taxation on their dividends, constitutes the impact of the C corporation treatment. C corporations are subject to this double taxation unlike S corporations and most other business entities taxed by the federal government.

[edit] Taxable income list

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Please help improve this article by adding reliable references. Unsourced material may be challenged and removed. (January 2008)

As of February 2006, the IRS lists the following tax rate schedule for "[m]ost corporations", except "qualified personal service corporations" and certain other cases^[3]:

Taxable Income ($)	Tax Rate^[3]	Deduction ($)^{[citation needed]}
0 to 50,000	15%	0
50,000 to 75,000	25%	5,000
75,000 to 100,000	34%	11,750
100,000 to 335,000	39%	16,750
335,000 to 10,000,000	34%	0
10,000,000 to 15,000,000	35%	100,000
15,000,000 to 18,333,333	38%	550,000
18,333,333 and up	35%	0