Will Form 1120 C Extent 2023-2024

Hi, welcome to Business Law TV! I'm your host Auntie Quan, a California lawyer. In this episode, I wanted to discuss the differences between an S corporation and a C corporation. Additionally, I'll provide an example of an actual client who opted for a C corporation and explain the reasons behind this decision. S corporations and C corporations are both types of corporations, meaning they are formed in the same manner. The key distinction lies in how they choose to be taxed. To become an S corporation, certain criteria must be met, and the IRS must be informed of the decision. Taxation as an S corporation is similar to that of a partnership or sole proprietorship. The corporation itself is not taxed, and instead, only the shareholders are taxed on their individual income. On the other hand, C corporations are subject to double taxation. This means that both the corporate income and shareholder income are taxable. This double taxation is why they are referred to as C corporations. To qualify as an S corporation, certain conditions must be fulfilled, such as having no more than 100 shareholders, limited to individual shareholders, and only issuing a single class of shares. Conversely, C corporations can have an unlimited number of shareholders, including corporations, LLCs, and partnerships. It is not necessary to be an individual to invest in a C corporation. Furthermore, C corporations have the flexibility to create multiple classes of shares. This can be advantageous for companies seeking to raise funds or provide certain shareholder preferences, like paying preferred shareholders dividends before common shareholders. One of my clients aimed to raise capital through crowdfunding and wanted to offer equity to investors. In a crowdfunding campaign, it is unlikely to achieve the desired target by limiting the shareholders to only 100 individuals. Additionally, this client needed...