Question

An IRS category of corporation that is treated like a partnership for tax purposes, avoiding taxation of corporate profits and subsequent taxation of dividends to shareholders, is called a(n) .

Answer 1

An IRS category of corporation that is treated like a partnership for tax purposes, avoiding taxation of corporate profits and subsequent taxation of dividends to shareholders ,is called a(double taxation)S corporations.

What Is an S Corporation?

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.

To be an S Corporation, your business first needs to be set up as a corporation by filling and submitting documents like the Articles of Incorporation or Certificate of incorporation to the appropriate government authority, along with the applicable fee.

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