Understanding S Corporations


According to IRS statistics, about six million corporation returns are filed every year Of those returns about 70 percent of these are Forms 1120S, showing that an S corporation is the preferred choice among corporations.1 To qualify as an S corporation, a corporation must satisfy specific requirements and must file an election. It is not uncommon to find that a corporation has not filed its election. This was a common audit issue when I worked for the IRS many years ago. If a corporation hasn’t filed its S election, there can be undesirable income tax consequences. The corporation is treated as a C corporation, which [...]