Legal Question in Business Law in Virginia

S corp vs C corp

1. Can a ''S-Corporation'' be considered a stock corporation, or is that just a ''C-Corporation?''

2. If a ''S-Corp'' is not considered a stock corp and one creates an S-corp, is it possible to change the type of corp from an ''S'' to a ''C''? If so how difficult is it to make the switch?


Asked on 3/06/08, 12:28 am

2 Answers from Attorneys
Ruth Emily Kochard Ruth Emily Kochard, Counselor at Law

Re: S corp vs C corp

An s-corporation is a stock corporation--non stock corporations are non profit. With respect to switching from an s to a c corporation, I would refrain from doing so without consulting a tax professional, and having an attorney consider the need to do so.

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Answered on 3/06/08, 7:38 am
Bernard Dietz Law Offices of Bernard C. Dietz, PC

Re: S corp vs C corp

"S corp" and "C corp" refer to how a corporation is taxed and not how it is legally formed. Both a S Corp and C corp have shares of stock.

For tax purposes, S corps are generally disregarded by the IRS (meaning the corp does not pay taxes but the shareholders do) while C corps are subject to the dreaded "double taxation "(meaning the corp pays taxes and the same dollars are taxed again at the shareholders personal level upon distribution).

Switching between S and C status is not difficult but should only be done upon the advice of a competent CPA or attorney. Hope that helps,

Bernie Dietz

Law Offices of Bernard C. Dietz, PC

4860 Cox Rd., Suite 200

Glen Allen, VA 23060

www.DietzLawFirm.com

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Answered on 3/06/08, 10:06 am


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