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Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Neeka who wrote (116517)	5/27/2005 5:59:44 AM
From: JDN	Read Replies (1) \| Respond to of 793738

My recollection of the original intent of the Subchapter S corps (small business) was to avoid payment of income taxes twice on dividends. ie once as a Corp and once as an individual when they were distributed. I have no idea how many Sub S corps consist only of one or two individuals. I am on the Board of a privately owned Bank, we have about 35 shareholders, most of which ARE NOT employees. ALL the income is required to be distributed out to the shareholders, THUS TAXABLE and we pay dividends sufficient to meet their tax liability overall. The rest we plow back into the bank for growth. I suspect this is more often the case then not. Were it a C Corp there would be absolutely no change in EMPLOYMENT taxes cause we are not using this as a DODGE to evade that tax. But, it would tend to impede our growth as we would have to report all the income as a bank and the bank pay the tax PLUS have a certain amount of dividends. If we grew less, we would hire fewer employees and THAT would impact employment taxes. jdn