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Taxes on corporate net income should not count as "double taxation" because the corporation is legally distinct in nearly every way from its shareholders. That'

by jerry1979 5y ago

Taxes on corporate net income should not count as "double taxation" because the corporation is legally distinct in nearly every way from its shareholders. That's the whole point of corporations. The corporation gets taxed once on net income because that corporation exists as a construct within govt structures. The shareholders get taxed because of the relationship they have with the corporation. It's literally fee for service.

weird-eye-issue 5y ago
This argument falls apart for flow through entities. They are essentially treated the same as the shareholders by the IRS but they are treated as distinct by other parts of the government, banks, courts, etc. So what service are you actually paying for besides just... Getting taxed by the IRS?
- jerry1979 5y ago
  I do not have any professional expertise that would allow me to make recommendations or financial/legal advice. Do you know if these flow through entities provide any limits on liabilities for the people who benefit from owning the pass through entity? If so, I would consider that as a benefit.
  - weird-eye-issue 5y ago
    That's my point. They are not taxed separately but they do provide liability protection. In your other comment you made it sound like they are taxed separately and that was the cost to pay for being treated like a separate entity.
    - jerry1979 5y ago
      It looks like I misunderstood your comment. The point I want to drive home is that when the government "backs" one entity, paying for that backing via taxes on net income should not count as double taxation because I consider that tax a fee to pay for that one entity. Whether the government offers some other kind of entity with different tax advantages is, to me, beside the point because as someone who is not a corporate tax expert, I have to assume that there must be some kind of advantage to running a C corp vs an llc.

weird-eye-issue 5y ago

This argument falls apart for flow through entities. They are essentially treated the same as the shareholders by the IRS but they are treated as distinct by other parts of the government, banks, courts, etc. So what service are you actually paying for besides just... Getting taxed by the IRS?

jerry1979 5y ago
I do not have any professional expertise that would allow me to make recommendations or financial/legal advice. Do you know if these flow through entities provide any limits on liabilities for the people who benefit from owning the pass through entity? If so, I would consider that as a benefit.
- weird-eye-issue 5y ago
  That's my point. They are not taxed separately but they do provide liability protection. In your other comment you made it sound like they are taxed separately and that was the cost to pay for being treated like a separate entity.
  - jerry1979 5y ago
    It looks like I misunderstood your comment. The point I want to drive home is that when the government "backs" one entity, paying for that backing via taxes on net income should not count as double taxation because I consider that tax a fee to pay for that one entity. Whether the government offers some other kind of entity with different tax advantages is, to me, beside the point because as someone who is not a corporate tax expert, I have to assume that there must be some kind of advantage to running a C corp vs an llc.