NetNews Usenet Archive 1992 #31/NN_1992_31.iso/spool/misc/invest/15463

Internet Message Format | 1992-12-29 | 1.6 KB

Path: sparky!uunet!elroy.jpl.nasa.gov!ames!sgi!cdp!mcaldon
From: McAldon International Inc. <[e-mail]>
Newsgroups: misc.invest
Date: 28 Dec 92 22:32 PST
Subject: Re: S-corp advantages and disadvantages
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|S-Corps don't pay income taxes.  All profits are passed on to shareholders
|as dividend income, which is subject to income tax but not to social
|insecurity tax.  Hence, there is no "double taxation" as there is in a
|C-Corp.
|If the corporation also pays the owner(s) some sort of salary, the owner
|will declare this as earned income and the corporation will declare the
|salary as a payroll expense.
|Ralph

If we want to be picky about this, S-Corps pass along profits as
distributions, not dividends.  If they receive dividend income, they
do pass that on as dividends so the recipients can enter them properly
on their 1040s.  You may be right about S-Corps never paying taxes but
I'm not sure in the case I cited.  If an S-Corp was foolish enough to
declare a dividend of its own, seems to me it would be liable for income tax.

|       DMcKenzie        |      "Time is the best teacher.      |
|    [e-mail]     |    Unfortunately, it kills all its   |
|                        |    pupils."   Hector-Louis Berlioz   |
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