I understand vaguely that these are corporations that have some of the flow-through taxation qualities of partnerships. Can anyone give me a quickie education on these? (The SD column about corporations from last week got me interesed…I’m taking Business Organizations now, but I’m too curious to wait.)
IANAL but the subchapter S election derives certain benefits that a regular C corporation would not enjoy, such as flow-through tax status. I’m oversimplifying but the tax attributes of the corporation flow directly to the shareholders in proportion to their ownership of stock. So, for example, if you were the only shareholder, you would receive 100% of the tax attributes (profits) and it would be taken (and taxed) as income on your return.
This could be beneficial, or not. For that, you’d need to consult a lawyer, an accountant, or both.
But you’d enjoy other corporate protections just as if you were a C corporation.