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C Corporation

August 25, 2011

John Jastremski Presents:

 

C Corporation

 

Definition

A C corporation is a type of business entity. Though the corporation may have many owners, it is nonetheless a single entity in the eyes of the law.
Prerequisites

  • There are no prerequisites for a C corporation

Key Strengths

  • Virtually unlimited in the number and type of shareholders
  • Noncompensation fringe benefits are generally tax free to shareholder-employees
  • Owners generally not personally liable for acts of corporation
  • Management is centralized
  • Interests are freely transferable
  • Entity is unrestricted in sharing ownership, profits, and control
  • Life of entity continues indefinitely

Key Tradeoffs

  • Profits are taxed twice
  • Entity may be relatively difficult and expensive to form and maintain
  • Entity is heavily regulated
  • Shareholders cannot deduct losses
  • Shareholders are taxed on contribution of appreciated property if such shareholders control less than 80 percent of the stock after the contribution
  • Liquidation of the corporation is a taxable event

Variations from State to State

  • Though the C corporation is a creature of state law, all states follow some form of theRevised Model Business Corporation Act

How Is It Implemented?

  • Complete requirements to establish C status as prescribed by state law (e.g., elect officers and directors, file articles of incorporation, adopt bylaws)
  • Obtain an employer identification number (EIN) from IRS and state, if necessary
  • Follow state required formalities to maintain C status (e.g., hold annual meetings)
  • File appropriate tax returns

 

This material was prepared by Broadridge Investor Communication Solutions, Inc., and does not necessarily represent the views of John Jastremski, Jeremy Keating, Erik J Larsen, Frank Esposito, Patrick Ray, Robert Welsch, Michael Reese, Brent Wolf, Andy Starostecki and The Retirement Group or FSC Financial Corp. This information should not be construed as investment advice. Neither the named Representatives nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. Please consult your Financial Advisor for further information or call 800-900-5867.

 

The Retirement Group is not affiliated with nor endorsed by fidelity.com, netbenefits.fidelity.com, hewitt.com, resources.hewitt.com,  access.att.com, ING Retirement, AT&T, Qwest, Chevron, Hughes, Northrop Grumman, Raytheon, ExxonMobil, Glaxosmithkline, Merck, Pfizer, Verizon, Bank of America, Alcatel-Lucent or by your employer. We are an independent financial advisory group that specializes in transition planning and lump sum distribution. Please call our office at 800-900-5867 if you have additional questions or need help in the retirement planning process.

 

John Jastremski is a Representative with FSC Securities and may be reached at http://www.theretirementgroup.com.

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