C Corporations

Tax Rates

C corporations' federal marginal tax rates are a flat 21%. Distributions may be taxed again. Shareholders pay tax on dividends. Losses do not pass through to shareholders.

Liability

Shareholders are shielded from personal liability for business debts. Only their investment is at risk.

C Corporations with Excess Inventory

C corporations with excess inventory may donate surplus property to charitable organizations and receive a tax deduction. For example, if you contribute food or medical supplies to a charity that provides for the homeless, you may deduct not only the cost of the goods, but also half of the lost profit (not to exceed twice the cost). For 2021, corporate contribution deductions are limited to 25% (normally 10%) of the corporation’s taxable income before considering the donation.