Posted by E.Eka on October 18, 2003 at 20:28:17:
I’m sure Bill already addressed this but an S-corp and partnerships are pass through entities. They are primarily shells, but income and loses flow through to your personal 1040 return. You can’t leave assets in the corporation nor does the corporation pay dividends. It is basically used to negate double taxation for smaller business owners. In order to qualify as an S-corp, there are certain conditions that must be met. One of wish is the number of people or owners of the corporation. I don’t have my business law text so I can’t remember off the top of my head. You were probably thinking of a C-Corp, which is treated separately than an individual. One more thing to remember is that with a C-corp if you have excessive gains, the service (IRS) will hit you with a personal holdings tax. This is if the corp was formed to hold real estate or participate in passive incoming producing activities.