re: So a C corporation is taxed twice on profit?

They'd better pay their taxes or their assets could be frozen.

This sounds like a Pond-zy scheme.

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- yes U.S. corporations are doubly taxed

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corporations are people. They get taxed once. Their shareholders are also people. They also get taxed once. Two separate persons each being taxed once does not mean each is individually taxed twice.

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Are most capital expenditure eligible for either 50 or 100 bonus depreciation these days anyway

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Nope. As a matter of fact if Congress does not act before year end 179 depreciation will be limited to $25000.

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They'd better pay their taxes or their assets could be frozen. This sounds like a Pond-zy scheme

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Wut?

I'm not behind on any taxes. We just formed the business we haven't even had cash flow. I owe nothing and there's no assets to freeze shite only thing I own is a truck in my name

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I'm not an idiot we have people managing the finances.

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I'm just fricking with you.

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I just noticed after looking at the tax structure of a c corp after we changed to it that it was taxed twice and I thought that sucks cause now they'll tax the profit and then tax my dividends. It sucks but I promise you the finances are being managed fine

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Two things that make this not as bad as you think

a) Dividends are normally taxed at capital gains rates, which are lower than normal income tax.
LINK

b) If the corporation doesn't pay any dividends, but holds on to them instead, the value of your stock will go up by the amount of the dividend, but it isn't actually taxed on your end until you sell the stock - and then it is taxed at the lower capital gains rate.


If you take the top corporate tax rate of 35% and the top capital gains tax rate at 20% - that is a 1 - (1-0.35*(1-0.2) = effective rate of 48%. But again - that's only on dividends that are actually paid out to you in cash. My guess is the corporation will want to keep the dividends for the first several years until its well established - so you won't actually be paying this rate until many years from now.

I presume also you'll be receiving a salary from the company? That is deductible as an expense of the corporation. There are payroll taxes, but in the end net taxation prolly works out lower if profit is paid as salary rather than dividends.

Yea we are going to work out those details in the next couple of weeks regarding dividend payouts.

I would hope they want to keep it within the company to grow the value of the shares, especially considering I can grow the company quickly by reinvesting the money and since it's a farm, write off all new equipment expenditures.

And yes I of course get a salary.

I appreciate y'all's input on this. I was just making a bitch at the government for it's tax rates thread, but it's turned into a productive discussion.

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I appreciate y'all's input on this. I was just making a bitch at the government for it's tax rates thread, but it's turned into a productive discussion.

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Would be awesome if 10% of the threads worked out this way. Good luck.

Curious if your investor is a family member, (I.e. Father)? From experience, banks don't lend that kind of money unless you have collateral. Maybe Dad co-signed? Private equity firms tend to find businesses to invest in or buy with solid EBITDA.

No not a family member. It's not a bank loan it's an investment from an out of state angel investor group