The S corporation is one of the most common forms of business structures used by community banks. In the past, it was not difficult to see why a community bank might choose to make the S-corporation election. One of the major benefits of electing S-corporation status was the tax advantages that it had relative to C corporations. As a C corporation, income is taxed at the corporate level and AGAIN at the shareholder level upon distribution, resulting in double taxation. As an S corporation, income is taxed only once at the shareholder level. This is a significant tax benefit for an S corporation!
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