Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Raymond Duray who wrote (14532)	2/5/2002 1:07:10 PM
From: Ilaine	Read Replies (1) of 74559

I was just sitting back down to edit. Corporations pay income tax, not on income, per se, but on the difference between income and expenses. If you've ever owned a business, you know that you don't pay tax on gross income, you pay tax on net income. If I was stupid enough to incorporate my legal practice as a Subchapter C corporation, then after I paid my overhead expenses and paid myself a reasonable salary, if I had any money left over I'd have to pay tax on it before I paid it to myself, then pay tax on it again after I paid it to myself. But if I was smart enough to make the Subchapter S declaration, then I'd only pay tax on the same money once. The money still gets taxed, but it only gets taxed once. Why should people who own Subchapter C corporations (which includes everyone who owns a share of a publicly owned corporation) have their share of the profits taxed twice? Gotta run to class, catch your answer later. Peace.

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