Subchapter S election permits small corporations to be taxed like disregarded entity. Form 2553 needs to be filed with the Internal Revenue Service (IRS). Once a corporation files Form 2553, which is called Election by a Small Business Corporation, the corporation becomes an S corporation. This election must be made with the IRS, and the corporation needs to meet the guidelines established in Subchapter S. Subchapter S CorporationsĪ C corporation can elect to be taxed according to Subchapter S of the Internal Revenue Code. Typically, the shareholder agreement addresses share ownership, share valuation, and the rights and responsibilities of the shareholder. The shareholders are also able to decide what goes into the shareholder agreement, which is also referred to as the stockholder agreement. The contents of the shareholder agreement differ from one S corporation to another. The S corp shareholder agreement is a contract between the shareholders of an S corporation.
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