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C Corporations
In the United States, when you incorporate a business, it is called a "C" Corporation i.e. all the corporations start as "C" corporation.
Please find below Tax Rate Schedule for C Corporations:
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Tax Rate Schedule |
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If taxable income (line 30, Form 1120, or line 26, Form 1120-A) is: |
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Of the |
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amount |
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But not |
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Tax is: |
over - |
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Over - |
over - |
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$0 |
$50,000 |
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15% |
$0 |
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$50,000 |
$75,000 |
$7,500 |
+ |
25% |
$50,000 |
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$75,000 |
$100,000 |
$13,750 |
+ |
34% |
$75,000 |
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$100,000 |
$335,000 |
$22,250 |
+ |
39% |
$100,000 |
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$335,000 |
$10,000,000 |
$113,900 |
+ |
34% |
$335,000 |
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$10,000,000 |
$15,000,000 |
$3,400,000 |
+ |
35% |
$10,000,000 |
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$15,000,000 |
$18,333,333 |
$5,150,000 |
+ |
38% |
$15,000,000 |
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$18,333,333 |
- |
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35% |
$0 |
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Qualified personal service corporations are taxed at a flat rate of 35% of net profits.
Double Taxation
When C corporation distributes its tax paid net income to its shareholders, the distributions gets taxed again as dividend income on the shareholder's return.
Hot Topic with IRS - Reasonable Compensation
The IRS uses various factors to determine if the compensation paid in closely held corporation is excessive. If a shareholder receives unreasonable high amounts of salary, then the IRS may deem a certain portion of the salary amount to be distribution. This would mean reduction in expenses on the corporate side and taxability of dividend income on the shareholder's return.
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