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Finance & Accounting
Pages 5 (1255 words)
Name Instructor Course Date Corporate Taxation Introduction A corporation is defined as a legal entity that is distinct. This definition enables a corporation to do business, open and run bank accounts, and own property using its legally recognized name. The general affairs and weighty business decisions of a corporation are managed and sighted by a board of directors, which consists of individuals who are nominated or elected by the majority of shareholders of the company.
This fact protects a corporation’s shareholders from legal action or liability because of the identity of a corporation as a legal entity, for example, if a company defaults or slips into bankruptcy, the debtors will go after the company’s assets in order to recover their debt. If the company’s assets are not enough to cover the debt, legally the debtors cannot go after the directors, officers, or shareholders personal assets in order to recover their debts. This is the primary advantage of a corporation. C and S Corporations There are many types of corporations, but in terms of taxation, there are two types of corporations. The two types refer to the special types of tax categories or elections recognized by the internal revenue authority. The two types of corporations are C and S corporations, and they have different advantages and disadvantages, and formulation processes. The formulation process of both types of corporations is similar, and it starts with filing at the state level before proceeding to the IRS. ...
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