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Question
Discuss the advantages and disadvantages of an S-Corporation.Some of the advantages of the S corporation are as follows:
A. Capital gains or losses from the corporation are treated as personal income or losses by the shareholders on a pro rata basis (determined by number of shares of stock held). The corporation is thus not taxed.
B. Shareholders retain the same limited liability protection as the C corporation.
C. The S corporation is not subject to a minimum tax, as is the C corporation.
D. Stock may be transferred to low-income-bracket family members (children must be 14 years or older).
E. Stock may be voting or nonvoting.
F. This form of business may use the cash method of accounting.
G. Corporate long-term capital gains and losses are deductible directly by the shareholders to offset other personal capital gains or losses.
Answer
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