Lesson: S Corporation vs. C Corporation Results

In this lesson, Nick Palazzolo, CPA, navigates the intricate decision-making process of choosing between an S Corporation and a C Corporation by examining a case study of a freelance graphic designer looking to incorporate her business. With his clear and engaging approach, he breaks down the projected tax implications for this graphic designer's first year under both entity types, factoring in her expected ordinary income, charitable contributions, and capital losses. He also delves into the limitations on deductions for each corporation type, such as C Corporations being restricted to deducting only 10% of their taxable income for charitable contributions, and the non-deductibility of net capital losses. By illustrating how separately stated items pass through to the shareholder's return in an S Corporation, Nick ensures that the nuances of each business structure's tax treatment are both accessible and applicable for real-world scenarios.