Is sale of C corporation stock subject to net investment income tax?

For C corporation shareholders, the NII tax applies to any dividends paid by the corporation and to any gain on the sale of the C corporation stock. The level of a C corporation shareholder’s participation in the corporation’s business is irrelevant for purposes of the NII tax.

Can C corporations have different classes of stock?

Corporation can use the issuance of different classes of stocks as a strategy to maintain control within a group of shareholders.

What happens to shares if a person dies?

Stocks/Shares Stocks and shares can be passed on to nominees by submitting a death certificate copy attested by a notary/gazetted officer. This form must be registered to the appropriate custodian such as NSDL or CDSL. If nomination is not registered, the heirs must submit either: Probate of Will.

How are shareholders taxed in a C corporation?

In addition, the Shareholder would be taxed on any salary paid by the C corp at ordinary income tax rates (up to 35% in 2009 and the salary would also be subject to employment taxes) and on any ordinary distributions at the dividend tax rate (generally 15% in 2009).

Who is the owner of a C corporation?

For simplicity of discussion, the options herein assume that the C corp is owned by one Shareholder (without charitable intentions), has accumulated earnings and profits, and owns appreciated assets. This article also only addresses federal income taxes.

How are C corporations different from S corporations?

The primary difference between C corporations and S corporations is that C corporations are taxed twice on earned income: : once at the corporate level when the income is earned, and again at the shareholder level when the income is distributed.

When does a C Corp have to pay passive income tax?

The passive income tax applies to a C corp that converts to an S corp if the corporation has accumulated C corp earnings and profits at the time of the S election and has excess net passive income.