An eligible domestic corporation can avoid double taxation (once to the corporation and again to the shareholders) by electing to be treated as an S corporation. An S corporation generally is exempt from federal income tax other than tax on certain capital gains and passive income. Its shareholders include on their tax returns their share of the corporation's separately stated items of income, deduction, loss, and credit, and their share of nonseparately stated income or loss.
More Information
For more information on S corporations, see the instructions for Form 2553,
Election by a Small Business Corporation
(pdf), and Form 1120S, U.S. Income Tax Return
for an S Corporation (pdf).
Sole proprietorships | Partnerships | Corporations | Limited Liability Companies
Information courtesy of the Internal Revenue Service.
