New Tax on S Corporations Proposed
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As lawmakers scramble to find $6 billion to pay for a one-year extension of the Stafford student loan rates, they’ve turned their attention to S corporation businesses as one source of funding. Under the tax code, S corporations are not subject to corporate taxation, and the profits and losses of the corporation are realized on the individual tax returns of the shareholders. The new tax, proposed by Senator Harry Reid, would require S corporations with three or fewer shareholders who declare at least $250,000 a year to pay employment taxes on that income.
