maximum number of shareholders in an s corp
no more than 75
title: S corporation text: S corporation An S corporation, for United States federal income tax purposes, is a closely held corporation (or, in some cases, a limited liability company (LLC) or a partnership) that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. In general, S corporations do not pay any income taxes. Instead, the corporation's income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or loss on their own individual income tax returns. S corporations are ordinary business corporations that elect to pass corporate title: C corporation text: known as an S corporation. An S corporation is not itself subject to income tax; rather, shareholders of the S corporation are subject to tax on their pro rata shares of income based on their shareholdings. To qualify to make the S corporation election, the corporation's shares must be held by resident or citizen individuals or certain qualifying trusts. A corporation may qualify as a C corporation without regard to any limit on the number of shareholders, foreign or domestic. In the United States, corporations are formed under laws of a state or the District of Columbia. Procedures vary widely title: S corporation text: of partnerships. As with partnerships, the income, deductions, and tax credits of an S corporation flow through to shareholders annually, regardless of whether distributions are made. Thus, income is taxed at the shareholder level and not at the corporate level. Payments to S shareholders by the corporation are distributed tax-free to the extent that the distributed earnings were previously taxed. Like a C corporation, an S corporation is generally a corporation under the law of the state in which the entity is organized. However, with modern incorporation statutes making the establishment of a corporation relatively easy, firms that might traditionally title: S corporation text: receipts tax (1.415%), but not the net profits tax (3.8907%). S corporations also benefit from Pennsylvania's flat personal income tax of 3.07% instead of the high corporation tax rate of 9.99%. S corporation An S corporation, for United States federal income tax purposes, is a closely held corporation (or, in some cases, a limited liability company (LLC) or a partnership) that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. In general, S corporations do not pay any income taxes. Instead, the corporation's income or losses are divided among and passed title: S corporation text: income, losses, deductions, and credits through to their shareholders for federal tax purposes. The term "S corporation" means a "small business corporation" which has made an election under § 1362(a) to be taxed as an S corporation. The S corporation rules are contained in Subchapter S of Chapter 1 of the Internal Revenue Code (sections 1361 through 1379). Congress, acting on the Department of Treasury's suggestion of 1946, created this chapter in 1958 as part of a larger package of miscellaneous tax items. S status combines the legal environment of C corporations with U.S. federal income taxation similar to that