Fewer Businesses Are Organized As Taxable Corporations

Research Report

Fewer Businesses Are Organized As Taxable Corporations

August 6, 2007

Abstract

Corporations that are taxed under subchapter C of the Internal Revenue Code pay a separate entity-level tax on their income (the corporate income tax) and their owners pay additional tax on corporate dividends and capital gains on sales of corporate shares. Other businesses are taxed as flow-through entities; they file tax returns and report their income but do not pay an entity-level tax. This article discusses the decline in both the share of businesses organized as C corporations and their share of business receipts between 1994 and 2004.

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