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Nay nay.
Common misconception.
No double taxation if all corporate earnings after expenses and losses are
paid out as salary or other compensation to the trader-employee. If no net
profits, no corp taxes; alternatively, corp tax rate on first $50K is, as I
recall, only 15% so, have at worst some more choices on how to handle
trading profits, how much cash to retain, etc. Also, Corp pays half the SEP
pre-tax, employee pays other half so no double there either.
If the trading is wildly successful, and management is dimwitted and/or
poorly advised, so much so that dividends are paid out, yes, there will be
double taxation. Likely? I think not.
NHBob
----- Original Message -----
From: "Gary Fritz" <fritz@xxxxxxxx>
To: <omega-list@xxxxxxxxxx>
Sent: Tuesday, July 24, 2001 11:25 AM
Subject: Re: Tax status, sub S
> > No, not Sub S; C corporation is the only way to go"formalizes" the
> > business entity (as opposed to a pass-thru which has all the IRS
> > code limitations of trading as an individual) so that "trader
> > status" is no longer an issue.
>
> However with a C corp you are in danger of double taxation. C corps
> must pay taxes on their income, then they can pass on income to you,
> and you pay taxes on it again. S corps pay no taxes and just pass
> the income through to your personal return.
>
> Gary
>
>
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