S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.
To qualify for S corporation status, the corporation must meet the following requirements:
Be a domestic corporation
Have only allowable shareholders
May be individuals, certain trusts, and estates and
May not be partnerships, corporations or non-resident alien shareholders
Have no more than 100 shareholders
Have only one class of stock
Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations)
Filing requirements:
Chart 1 - S corporation
Chart 1 - S corporation |
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If you are an S corporation then you may be liable for... | Use Form... | Separate instructions... |
Income tax | ||
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Excise taxes | Refer to the Excise tax webpage |
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Chart 2 - S corporation shareholders
S corporations that are required to file 10 or more returns in a calendar year (calculated by aggregating all returns of any type) are required to e-file their Forms 1120-S, effective for returns required to be filed on or after January 1, 2024. Find details on the final e-file regulations. For more e-file information, see E-file for business and self-employed taxpayers.