The definition of Corporation is sometimes very confusing. Corporation tax refers to a tax levied by various jurisdictions on the profits made by companies or associations. It is a tax on the value of the corporation’s profits. The rules you must use to determine whether a business is taxed as a Corporation changed for business formed after 1996.
Business formed before 1997 and taxed as a corporation under the old rules will generally continue to be taxed as a corporation.
Business formed after 1996 and taxed as corporations are:
- A business formed under a federal or state law that refers to it as a corporation, body corporate, or body politic.
- A business formed under a state law that refers to it as a joint-stock company or joint-stock association.
- An insurance company.
- Certain banks.
- A business wholly owned by a state or local government.
- A business specifically required to be taxed as a corporation by the Internal Revenue Code (for example, certain publicly traded partnerships).
- Certain foreign businesses.
- Any other business that elects to be taxed as a corporation (for example, a limited liability company (LLC) by filling Form 8832, Entity Classification Election.
A corporation should keep its record for as long as they may be needed for the administration of any provision of the Internal Revenue Code. Usually records that support items of income, deductions, or credits on the return must be kept for 3 years from the date the return is due or filed, whichever is later. Keep records that verify the corporation’s basis of the original or replacement property. The corporation should keep copies of all filed returns. They help in preparing future and amended returns.
For additional information regarding Corporation’s Definitions, Formations, Accounting Methods, Taxes and Filing Requirements, Distributions and Liquidations refer to: