Optimized tax solutions for C Corps

A corporation is a legal business entity formed by filing articles of incorporation with the state’s secretary of state. It operates as an artificial person, separate from its shareholders, and is subject to distinct taxation. Corporations are popular for their ability to raise capital quickly and provide limited liability to investors.

A C-Corporation is a tax classification available to corporations and LLCs. It is treated as a separate legal entity for tax purposes, subjecting both the corporation and shareholders to taxation. C-Corporations offer advantages such as no restrictions on shareholders and eligibility for additional tax deductions.

C-Corporations are taxed at both the federal and state levels. The corporate income is taxed at a flat federal rate of 21%, and shareholders pay taxes on dividends received. This dual taxation is known as double taxation. C-Corps can benefit from various deductions and credits, making them advantageous for certain businesses.

Unlike pass-through entities, C-Corporations pay income tax at the corporate level. Pass-through entities, like LLCs and S-Corporations, pass income directly to shareholders, avoiding corporate-level taxation. C-Corporations cannot benefit from pass-through losses at the individual shareholder level.

Your accountant can help you select the form you need, but Form 1120 is for c-corporations. Form 1120-S is for corporations that have made the S-corp election.  Form 1120-W is the estimated tax form for corporations based on the current year’s taxes.

C-Corporations can claim deductions for net operating losses at the entity level, while pass-through entities allow shareholders to deduct a portion of losses on their personal tax returns. C-Corporations have limitations on capital loss deductions, and losses can only be deducted by the company.

Double taxation refers to the taxation of a corporation’s income twice: first at the corporate level and again at the individual level when dividends are distributed. Despite double taxation, proper income splitting and tax planning can help optimize tax situations for C-Corporations and their shareholders.

C-Corporations are subject to a flat federal corporate tax rate of 21%. State tax rates vary, ranging from 0% to 11.5%. Some states, like Wyoming and Ohio, do not levy corporate income tax.

C-Corporations can deduct various business expenses, including salaries, bonuses, medical insurance premiums, and charitable contributions. They may also be eligible for tax credits such as the R&D credit, general business credit, and foreign tax credit.

Cleer Tax provides expert guidance for C-Corporations, offering consultations, tax planning, and assistance with federal and state tax filings. They specialize in simplifying the complex process of C-Corporation taxation and ensuring optimal financial outcomes for businesses.

C-Corporations must file an annual federal tax return (Form 1120) and make quarterly estimated tax payments (Form 1120-W). They also need to file Form 941 for employee tax withholdings. State tax filing requirements vary by state.

So form 5472 is used when a company has a reportable transaction with a foreign or domestic related party.  In most cases, this will mean that you have a non-US person or persons who own 25% or more of the company.  It could also be used when you have a foreign company engaged in business in the US. If either of those sound familiar then yes you need a form 5472.

We can include a form 5471 for a dormant entity if it has less than $5k in income and expenses and less than $100k in assets.  Form 5471 is required for companies that are shareholders in a foreign corporation.  If your business has active foreign subsidiaries please see our Foreign Subsidiary packages.  

Form 1125-A is used by companies that need to report a deduction in their Cost of Goods Sold. 

Form 8949 is used by corporations to report sales and other dispositions of capital assets. Usually, these will be reported on Form 1099-B or 1099-S and Form 8949 is used to reconcile the amounts.  

Form 6252 is used by companies when they have installment sale income. An installment sale is when you sell property and at least one of the payments is received after the end of the tax year in which you sold the property. 

Form 1139 is how a corporation can apply for a tentative refund from the carryback of a net operating loss, a net capital loss, or an unused general business credit.  It can also be used for an overpayment of tax due to a claim of right adjustment.  Please note that amended return fees may apply.