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:

Evaluative Criteria

The various dimensions, standards, or attributes that consumers consider when judging the merits of competing options.

Consideration Set

A group of brands or products that a consumer views as viable options to fulfill a specific need or desire.

Subjective Attributes

Qualitative features or characteristics of a product or service that are based on personal opinions, tastes, and preferences.

Objective Attributes

The tangible and measurable features of a product, such as quality, price, and size, which can be directly compared across products.