Software Club 210: Light Red/Club_Software_210_Light_Red_Micro_Star_1997.iso/sba/f231.sbe

Text File | 1997-01-15 | 22KB | 553 lines

@109 CHAP 11

              ┌───────────────────────────────────┐
              │           C CORPORATIONS          │
              └───────────────────────────────────┘

A "C corporation" is simply a regular corporation that has not
made an "S corporation" election.  As such, a C corporation
is a separate taxable entity, paying taxes on its net taxable
income at the following rates:

              .  First $50,000 of income  --  15%
              .  $50,000 to $75,000       --  25%
              .  $75,000 to $100,000      --  34%
              .  $100,000 to $335,000     --  39%
              .  $335,000 to $10 million  --  34%
              .  $10 million to $15 mil.  --  35%
              .  $15 mil. to $18.333 mil. --  38%
              .  Over $18,333,333         --  35%

@IF117xx](NOTE:  @NAME is a C corporation.)
@IF117xx]
@IF118xx]NOTE: @NAME is NOT a C corporation.
@IF118xx]
@IF118xx]Accordingly, as an S corporation, it will ordinarily not be
@IF118xx]subject to any federal income taxes on its income, unlike a
@IF118xx]C corporation.
@IF118xx]
Note that if a C corporation is considered to be a "qualified
personal service corporation" as defined in the Revenue Act
of 1987, ALL of its income will be subject to tax at a flat
rate of 35%, instead of the bracket schedule above.

C Corporations must file an annual federal income tax return
by the 15th day of the 3rd month after the taxable year ends,
on Form 1120.  (S corporations file a Form 1120S.)

@CODE: AL AK AZ AR CO CT DE FL GA ID IL IN IA KS KY LA ME MD MA MN
It will also be necessary to file state corporate income
tax returns annually with the state taxing authorities in
@STATE.

@CODE:OF
@CODE: MS MO MT NB NJ NM NY NC ND OH OK OR PA RI SC TN UT VT VA WV WS
It will also be necessary to file corporate income tax
returns with the state of @STATE.

@CODE:OF
@CODE: AL
@STATE levies a 5% tax on corporations' income, or
a 6% rate on financial institutions.
@CODE:OF
@CODE: MO
Missouri levies a 6.25% tax on corporations' income, or
7% on the net income of banks, trust companies and credit
institutions.
@CODE:OF
@CODE: AK
The state of Alaska imposes a tax on corporate taxable
income, which starts at a 1% bracket and rises to a maximum
bracket of 9.4% on income over $90,000.
@CODE:OF
@CODE: AZ
Arizona imposes a flat rate corporate income tax at the
tax rate of 9%.  There is a minimum corporate tax of $50 a
year.
@CODE:OF
@CODE: AR
Arkansas has a graduated corporate tax on income, with a
maximum rate of 6% on corporate taxable income over $75,000.
But corporations with over $100,000 of net income pay a
flat tax rate 6.5% on all their income.

Arkansas also imposes a franchise tax on the capital stock
of corporations, which can range from a minimum tax of $59
a year to $1,075,000 a year.  A flat annual franchise tax
of $109 applies to limited liability companies.
@CODE:OF
@CODE: CO
Colorado imposes a corporate income tax at a flat rate of
5%.
@CODE:OF
@CODE: CA
California imposes a franchise tax on the income of
corporations doing business within the state, at a flat
rate of 9.3% of the corporation's taxable income.  This
rate has been cut to 8.84% for income years (tax years,
in English) beginning on or after January 1, 1997.  For
those corporations with a 1996-97 fiscal year, the tax
rate will be a blended rate between 9.3% and 8.84%.

The corporation alternative minimum tax rate has also been
cut, from 7% to 6.65%, beginning in 1997.

Even if a corporation has no income (or a loss), it still
must pay a minimum franchise tax each year of $800.  For
income years beginning on or after January 1, 1997, the
minimum franchise tax is reduced to $600 for new businesses
with gross receipts of less than $1 million and a tax
liability of $800 or less.  The reduced franchise tax for
new businesses does not apply to any corporation if 50
percent or more of its stock is owned by another corporation.
CAL. REV. & TAX. CODE Sec. 23221.

Banks and other financial corporations are subject to a
higher franchise tax rate that varies from year to year
(11.3% of income in 1995).  The higher franchise tax is
imposed because banks and financial corporations are exempt
from certain other state taxes.

The California franchise tax return is Form 100 (Form 100S
for S corporations).  While California now recognizes S
corporations and taxes their income to the shareholders,
it also imposes a 1.5% tax at the corporate level on an S
corporation's taxable income.
@CODE:OF
@CODE: CT
Connecticut imposed a tax of 11.25% on corporate income
in 1995 (or, if higher, a tax of 3.1 mills per dollar of
capital, up to a maximum tax of $1 million).  The income
tax rate declines to 10.75% in 1996, to 10.5% in 1997, 9.5%
in 1998, 8.5% in 1999, and to 7.5% for income years beginning
after December 31, 1999.  There is a minimum tax of $250.
@CODE:OF
@CODE: DE
Delaware taxes corporations (other than banks and trust
companies) at a flat 8.7% tax rate.  The tax rate on banks
DECLINES after $20 million of taxable income, to as low as
2.7% on income over $30 million.
@CODE:OF
@CODE: DC
A corporate income tax return must also be filed with the
District of Columbia.  The District taxes corporations
(including S corporations!) at a rate of 9.5% of federal
gross income (with certain adjustments) for tax years
beginning on or after January 1, 1995, plus a 5% surtax,
bringing the overall rate to 9.975%

There is a $100 minimum tax, and a "public safety fee" that
ranges from $25 to $8,400.
@CODE:OF
@CODE: FL
Florida taxes corporations' income at a rate of 5.5%,
generally.
@CODE:OF
@CODE: GA VA
The state of @STATE taxes corporate income at a rate
of 6%.
@CODE:OF
@CODE: HI
Corporations doing business in Hawaii, except for S
corporations, certain financial corporations and SBICs,
are subject to Hawaii's corporate income tax, at the
following tax rates:

    . 4.4% on the first $25,000 of income

    . 5.4% on the next $75,000

    . 6.4% on taxable income in excess of $100,000

Certain qualified taxpayers may instead pay an alternate tax
based on 1/2 of 1% of Hawaii sales, if they have not more
than $100,000 annual in-state sales.

Banks, savings and loans, SBICs and certain other financial
corporations are generally not subject to the corporate
income tax, but instead pay a corporate franchise tax at an
11.7% tax rate, based on their taxable income.  Insurance
companies pay neither tax, instead paying a "gross premiums
tax."

In addition, Hawaii has an all-pervasive "General Excise
Tax" or (gross income tax), in lieu of a sales tax, which
applies to virtually all business revenues, generally at a
4% rate.  It applies not only to corporations, but to the
gross income of virtually all businesses, and even applies
to amounts paid for services (other than salary or wages)
or for real estate rentals.
@CODE:OF
@CODE: IL
The Illinois corporation tax rate is 4.8% in 1996.  The
Personal Property Replacement Income Tax, which is an
additional income tax, remains at 2.5% (1.5% on most kinds
of partnerships, and on LLCs and S corporations).
@CODE:OF
@CODE: ID
Idaho's corporate tax rate is 8% of taxable income, plus
a $10 excise tax when filing the tax return.  There is a
$20 minimum tax, regardless of whether there is any taxable
income.
@CODE:OF
@CODE: IA
Iowa taxes corporate income at rates starting at 6% on the
first $25,000 and rising to as much as 12% on income over
$250,000.
@CODE:OF
@CODE: KS
In Kansas, the basic corporate tax rate is 4%, with a surtax
of 3.35% on taxable income over $50,000.
@CODE:OF
@CODE: KY
Kentucky has graduated corporate income tax rates, beginning
at 4% on the first $25,000 of taxable income and rising to
a top rate of 8.25% on income over $250,000.
@CODE:OF
@CODE: LA
Louisiana corporate tax rates range up to a maximum tax
bracket of 8% on income over $200,000.
@CODE:OF
@CODE: LS
@STATE taxes corporate net income, after bribes, at
a rate of 150%.  This is a major incentive to reduce taxable
income, as one might well