Svelter Corporation does not face the problem of double taxation as the Internal Revenue Service (IRS) does not tax the earnings of the company separately. Instead, taxes are only levied on the personal income of the stockholders. A limitation, however, is that the company is only allowed to have a maximum number of 100 stockholders at a time. Given this information, Svelter Corporation is a(n) _____.
A) S corporation
B) C corporation
C) not-for-profit corporation
D) statutory close corporation

Question

Quizplus · Accepted Answer

S corporations are not subject to double taxation, as income is passed through to shareholders who report it on their personal tax returns. They are also limited to 100 shareholders.

Svelter Corporation Does Not Face the Problem of Double Taxation