S Corporation

S Corporation (Issuer and Investor related) – A corporation that makes a valid election to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code. In general, S corporations do not pay any federal income taxes. Instead, the corporation’s income or losses are divided among and passed through to its shareholders. The shareholders must then report the income or losses on their own individual income tax returns.  Importantly, S Corporations can only issue common equity shares, not preferred.

Back to Glossary of Terms