S Corp - C Corp - Partnership Comparison
S-Corps have to file Form income on a
1045S
C Corporation
Elections:
EPartnership/LLC
Elections: Default status if unincorporated and have more than one owner.
S Corporations
Elections: Must formally elect to have the corporation taxed as an S corp.
S Corporation
Entity Debt Included in stock (or partnership interest) basis : Generally No, However, loans made from shareholder to corporation create debt basis. Losses may be deducted to extent of stock basis and then debt basis.
C Corporation
Entity Debt Included in stock (or partnership interest) basis : NO
Partnerships/LLC
Entity Debt Included in stock (or partnership interest) basis : Yes. All entity liabilities are allocated to basis partners
S Corporation
Entity-Level Taxes: Generally no, but may be required to pay built-in gains tax, excess passive investment income tax, or LIFO recapture tax if converting from C to S corporation.
Partnership/LLC
Entity-Level Taxes: NO
C Corporations
Entity-Level Taxes: Yes, based on corporate tax rate
C Corporation
Fringe Benefits: Can pay nontaxable fringe benefits to owners
S Corporation
Fringe Benefits: Can pay nontaxable fringe benefits to owners who own 2 percent or less of stock.
Partnership/LLC
Fringe Benefits: May not pay nontaxable fringe benefits to owners.
Partnership/LLC
Income and loss allocations: INcome and loss flow through to ownners but may be allocated based on something other than ownership percentages (special allocations)
C corporations
Income and loss allocations: Not allocated to shareholders
S Corporations
Income and loss allocations: income Income and loss flow through to owners based on ownership percentages
S-Corps have to file separately stated items on a
K1
C Corporation and S Corporations
Liquidating Distributions: Corporation and shareholders generally recognize gain or loss on distributions
Partnership/LLC
Liquidating Distributions: Partnership and partners generally do not recognize gain or loss on liquidating distributions
S Corporation and Partnerships/LLC
Loss Limitations: Losses flow through but subject to basis limitation, at-risk limitation, and passive activity limitations.
C Corporation
Loss Limitations: Losses remain at the corporate level.
Partnerships/LLC
Number of Owner Restrictions:
S-Corporation
Number of Owner Restrictions:
C Corporation
Number of Owner Restrictions: No Restrictions
Partnerships/LLC
OPERATING DISTRIBUTIONS: Entity tax consequences-- Generally no gain or loss on distribution of property
C Corporations and S Corporations
OPERATING DISTRIBUTIONS: Entity tax consequences-- gain on diistribution of appreciated property; no loss on distribution of depreciated property
S Corporations And Partnerships/LLC
OPERATING DISTRIBUTIONS: Owner tax consequences-- Generally not taxable to the extent of owner's basis
C Corporations
OPERATING DISTRIBUTIONS: Owner tax consequences-- Taxable as dividends to extent of earnings and profits
Partnerships/LLC
Salary to Owners Permitted: Generally no. Salary-type payments are guaranteed payments subject to self-employment tax.
C Corporation and S Corporation
Salary to Owners Permitted: Yes
Partnership/LLC
Self-Employment income status of ordinary income allocations: May be self-employment income depending on partner's status
C Corporation
Self-Employment income status of ordinary income allocations: Not Applicable
S Corporation
Self-Employment income status of ordinary income allocations: Not self-employment income
Partnerships/LLC
Tax Year: Based on tax year of owners
S Corporation
Tax Year: Generally calendar year
C Corporation
Tax Year: Last day of any month or 52/53-week year
S Corporations
Type of Owner Restrictions:
C-Corporations and Partnerships/LLC
Type of Owner Restrictions: No Restrictions
C- Corporation and S- Corporations
When Forming or Contributing Property to an entity
Partnership/LLC
When Forming or Contributing Property to an entity
