Aubrey Has Been Operating His Business as a C Corporation

question 94

Essay

Aubrey has been operating his business as a C corporation for the past 5 years. The corporation pays him a reasonable salary. The profits of the corporation, after paying Federal income tax, are distributed to him each year as a dividend. He is considering electing S status for his corporation in order to avoid double taxation. What factors should he consider assuming after-tax earnings will continue to be distributed to him?

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Definitions:

Critical Few

A term referring to the small number of vital factors or key individuals that are considered most important in achieving a larger goal or performance target.

Culture Shock

The feeling of disorientation experienced by someone who is suddenly subjected to an unfamiliar culture, way of life, or set of attitudes.

Mental Strain

Psychological stress or pressure that affects an individual's mental health or well-being.

Expatriate

An individual who lives and works in a country other than their native country, often for an extended period.