The deal calls for the company to be converted into an S corporation.
In general, S corporations do not pay any federal income taxes.
That is not always possible, however, because of the restrictions on S corporations.
There are about 1.5 million of these S corporations, which cannot have more than 35 shareholders.
Or, he could set up an S corporation, which would pass through its profits to shareholders of the company.
Now, business owners who need a legal shield may be better off remaining S corporations.
An estimated 1.5 million of them are S corporations.
Stockholders in S corporations generally do not take out all their profits.
The voting machine operations were sold in 1965, and an S corporation was formed.
Those who incorporate typically begin as S corporations, named for the section of the tax code that created them.