Are you a closely held business that operates as a C corporation? If so, this is must reading. If you are an S corporation, chances are you will learn one or more tax tricks here to enrich you or your family, rather than the IRS. To start, burn this into your mind. There are only three good reasons to be a C corporation: 1) Your taxable profits are, and are likely to remain, under about $125,000, and you need the after-tax dollars in the corporation to maintain growth or pay down debt; 2) You use the C corporation as a vehicle to gain the benefit of deducting your health insurance or long-term care premiums; 3) You have carry-forward losses or other tax credits that would be lost if you make an S election. Here's a list of the pros and cons of staying a C corporation or electing S corporation status (Note: nine of 10 corporations enjoy tax advantages by being an S corporation.)
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