Is an Idaho C Corporation Considered a Disregarded Entity?
No. An Idaho C-Corporation is a separate business entity from its owners/shareholders. Its income does not pass-through to shareholders and, therefore, is not disregarded. This Idaho business entity has natural rights as you would expect with a living person.
Is an Idaho C Corporation Taxed at Corporate Level?
Yes. An Idaho C-Corporation pays a flat 21% taxes on the profits at the corporate level first. The Idaho C-Corporation will file its tax return separate from all owners/shareholders. After that, individual shareholders pay taxes on dividends paid by the corporation at a reduced, qualified dividend rate.
Can an Idaho C-Corporation own an LLC an S-Corporation?
Can an Idaho C-corporation own an LLC?
- Since a C-corporation is its own legal identity (with natural human-like rights), a C corporation can own an interest in an LLC.
- An LLC has little rules on who can have ownership/membership, and A C-corporation has little to no regulations on what it can own. This is an excellent paring.
Can an Idaho C-corporation own an S-corporation?
- An Idaho S-corporation can own a C-corporation.
- But a C-corporation cannot own an S-corporation.
- An S-corporation has little rules about what it can own but has strict rules on who can own it. Idaho S-corporations can only be owned by an individual, who is the US. Citizen or a single-member LLC that is taxed as an Idaho Sole Proprietor.
- Whereas, the Idaho C-corporation has little rules about who can own it, or what it can own, but would be disqualified to purchase shares of an Idaho S-Corporation. The Idaho C-corporation is neither an individual nor a single-member LLC being taxed as a pass-through, which are the requirements for an Idaho S-corporation ownership.
Filing an Idaho C-Corporation
An Idaho C-Corporation can have considerable advantages to pass-through entities as to greater fringe benefits. As employees, owner-employees of an Idaho C-Corporation qualify for certain employee fringe benefits.
Example: Idaho Health insurance can be wholly tax-free to Idaho C-Corporation owner-employees (through full deduction by the C-Corporation and full tax exemption for the owner-employee).
Another advantage of the Idaho C-Corporation is that they are less likely to be subject to passive loss deduction limitations. These limit the opportunity to deduct losses from activities the taxpayer doesn’t “materially participate” in, against income from investments or other businesses.
Another tax disadvantage of Idaho C-Corporation status is its limited ability to report for tax purposes on the cash method of accounting, which generally defers tax as compared to the accrual method.