When is a C-corp structure tax-advantaged?

When the company retains most earnings for reinvestment. C-corp pays 21% flat on profits; S-corp owners pay personal rates (up to 37%) immediately on pass-through income regardless of distributions.

What is double taxation in a C-corp?

C-corp profits are taxed at 21%, then qualified dividends distributed to shareholders are taxed again at 0%/15%/20% (plus 3.8% NIIT for high earners). Total effective rate on distributed profits: 37–40%.

What are the key restrictions on S-corp elections?

Maximum 100 shareholders; only US citizens/permanent residents and certain trusts can be shareholders; only one class of stock; no foreign shareholders; certain financial institutions and insurance companies cannot elect S-corp status.

C-Corp vs S-Corp Tax Comparison

Compare total tax burden of C-corp (21% flat + dividend tax on distributions) vs S-corp (pass-through, ordinary income rates + FICA). Optimal structure depends on reinvestment needs.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Compare total tax burden of C-corp (21% flat + dividend tax on distributions) vs S-corp (pass-through, ordinary income rates + FICA). Optimal structure depends on reinvestment needs. Use the c-corp vs s-corp result to inform your calculation.

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Frequently Asked Questions

When is a C-corp structure tax-advantaged?

What is double taxation in a C-corp?

What are the key restrictions on S-corp elections?