In forming a corporation, prospective shareholders transfer money, property, or both, for the corporation's capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions.
The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. However, shareholders cannot deduct any loss of the corporation.
More Information
For more information on corporations, see Publication 542,
Corporations.
Sole proprietorships | Partnerships | S Corporations | Limited Liability Companies
Information courtesy of the Internal Revenue Service.
