3 Tax Advantages of C Corps over S Corps.
Many articles berate the double tax feature of C Corps, while exalting the virtues of S Corps. However, there are situations, where a C Corp may be more beneficial for tax purposes.
Flat 21% tax rate.Recent changes to the U.S. tax system, have brought the corporate tax rate to an almost record low of 21%, which is largely flat, irrespective of taxable income. This could be significant, because 21% may be lower than individual S Corp shareholders may be subject to, which can offset the double taxation disadvantage of C Corps.
Less reasonable compensation issues.IRS, often scrutinizes, whether a corporation's shareholders get paid a reasonable compensation, along with whether its own coffers are receiving the corresponding self employment tax payments. Such scrutiny is often less for C Corps than S Corps.
More able to take advantage of sophisticated tax strategies.Since, C Corps are fully separate legal, economic and tax entities from their shareholders, they have an easier time to utilize legal maneuvers to exploit certain tax breaks of the U.S. tax code, by executing a number of sophisticated tax strategies.