S Corporation
/ˌes ˌkɔːrpəˈreɪʃən/
Definitions
- (n.) A type of corporation that meets specific Internal Revenue Code requirements to be taxed under Subchapter S, generally allowing income, losses, deductions, and credits to pass through to shareholders' personal tax returns.
The small business elected to operate as an S Corporation to avoid double taxation.
Commentary
An S Corporation must meet eligibility criteria like a limited number of shareholders and only one class of stock; it is distinct in tax treatment from C Corporations.