a$.$ Explain the principal difference in the tax treatment of an S corporation and a C corporation.

b$.$ Why would a C corporation be used if an S corporation is generally exempt from tax?

a$.$ Explain the principal difference in the tax treatment of an S corporation and C corporation.

AC Corporation is

and for tax purposes is considered

Its income

Each shareholder reports his or her share

of the income

distributed.

b$.$ Why would a C corporation be used if an S corporation is generally exempt from tax?

higher individual tax brackets $($e$.$g$.,32\%,35\%,$ and $37\%).$

C$.$ Some corporations are ineligible for making an S corporation election. Others may choose the C corporation because the $21\%$ corporate tax rate is less than the rate for the higher individual tax brackets $($e$.$g$..32\%,35\%,$ and $37\%).$

rate for the higher individual tax brackets $($e$.$g$.,32\%,35\%,$ and $37\%).$