UnderGround Forums
 

LegalGround >> Corp Law Question


3/14/10 8:05 PM
Ignore | Quote | Vote Down | Vote Up
sux@bjj
38 The total sum of your votes up and votes down Send Private Message Add Comment To Profile

Edited: 03/14/10 9:29 PM
Member Since: 1/1/01
Posts: 9386
 
dividends on s corporation and c corporation differences?
3/20/10 1:08 AM
Ignore | Quote | Vote Down | Vote Up
seg
44 The total sum of your votes up and votes down Send Private Message Add Comment To Profile

Member Since: 3/28/05
Posts: 11299
 From a state law corporate law standpoint a dividend is a dividend regardless of whether the corporation is a C or an S corporation.  The only difference is in the federal income tax consequences of the dividend.

In most instances a dividend from a C corporation is taxable income to the shareholder and his adjusted tax basis in his stock is unchanged.  In most instances a dividend from an S corporation is not taxable income to the shareholder and instead reduces his basis in his stock.  This is basically because the S corporation is a pass-through entity for income tax purposes and the C corporation is a tax paying entity.
3/22/10 3:59 PM
Ignore | Quote | Vote Down | Vote Up
Fake Pie
37 The total sum of your votes up and votes down Send Private Message Add Comment To Profile

Member Since: 12/2/05
Posts: 22876
To be clear, the dividend on the S-Corp isn't taxable AGAIN. However, any income the S-Corp has is taxable to all the stockholders, pro rata, whether or not they make any dividends. With the C-Corp, it is taxed to the Corp as corporate income as it comes in, then is taxed to the stockholder when and if a dividend is ever made... "again." Ye olde "double taxation" issue.

Reply Post

You must log in to post a reply. Click here to login.