M&A Glossary

S Corporation

Short for “Subchapter S Corporation”. A state-incorporated business that elects special tax treatment.

See Also

C Corporation, entity.


An S Corporation does not pay income taxes. Instead, its owners pay income taxes on their proportion of the corporation’s profits allocated to them on their K-1 tax form (IRS Form 1065) for each fiscal year. S Corporation earnings are taxed only one time because earnings pass through to the investors.

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