A form of corporation, allowed by the IRS for most companies with 75 or fewer shareholders, which enables the company to enjoy the benefits of incorporation but be taxed as if it were a partnership. The name derives from subchapter S of the Internal Revenue Code which governs the taxation of this type of corporation. S corporations’ profits are passed through to shareholders and taxed at the personal rates of the shareholders. S corporations have limits on the numbers and types of shareholders.

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