> Corporations do not pay income tax as such - they do have some filing fee type of taxes, but basically the taxes you pay come out of your payroll.
Are you sure that is correct? I am neither an accountant, nor even American, but IRS.gov says:
"The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation."
I think that only applies to C corporations, though I'm curious now about US tax law. Do tax shelters like you propose exist? Do you have any more information??
S corps pass through profits, which are reported only once, on the owner's personal income tax statement. It avoids the double taxation of a C corporation.
Are you sure that is correct? I am neither an accountant, nor even American, but IRS.gov says:
"The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation."
(source - http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employ...)
For the 2011 tax year, Wikipedia pegs the US federal income tax rate at between 15% and 35% (depending on income level).
(source - http://en.wikipedia.org/wiki/Corporate_tax_in_the_United_Sta...)
I think that only applies to C corporations, though I'm curious now about US tax law. Do tax shelters like you propose exist? Do you have any more information??