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C Corporation

A C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners

 

A C corporation, under United States federal income tax law, refers to any corporation that is taxed separately from its owners. A C corporation is distinguished from an S corporation, which generally is not taxed separately. Many companies, including most major corporations, are treated as C corporations for U.S. federal income tax purposes. C corporations and S corporations both enjoy limited liability, but only C corporations are subject to corporate income taxation.

In the United States, corporations are formed under laws of a state or the District of Columbia. Procedures vary widely by state. Some states allow formation of corporations through electronic filing on the state’s web site. All states require payment of a fee (often under USD200) upon incorporation.[4] Corporations are issued a “certificate of incorporation” by most states upon formation. Most state corporate laws require that the basic governing instrument be either the certificate of incorporation or formal articles of incorporation. Many corporations also adopt additional governing rules known as bylaws. Most state laws require at least one director and at least two officers, all of whom may be the same person. Generally, there are no residency requirements for officers or directors. However, foreign aliens have to form corporations via registered agents in many states as an obligation.

Any distribution from the earnings and profits of a C corporation is treated as a dividend for U.S. income tax purposes. “Earnings and profits” is a tax law concept similar to the financial accounting concept of retained earnings. Exceptions apply to treat certain distributions as made in exchange for stock rather than as dividends. Such exceptions include distributions in complete termination of a shareholder’s interest[8] and distributions in the liquidation of the corporation

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