S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income. To qualify for S corporation status, the corporation must meet the following requirements: be a domestic corporation, have only allowable shareholders, have no more than 100 shareholders, have one class of stock and not be an ineligible corporation. To become an S corporation, the corporation must submit Form 2553 to the IRS.
For more information on small business taxes, contact a Nevada Corporate Headquarters representative at 1-800-508-1729