The C-Corp is a separate taxable entity, pays it's own taxes at Corporate tax
brackets and rates
Just as with an IRRevocable trust.
In corporate law
the Corporation is called a fictitious person.. because it IS a separate entity.
This is what causes the double taxation
one hears about with C-Corps.
The C-Corp files an 1120, pays it's corporate taxes, and then if the owner wants any income
from the company, they declare a dividend
and then send out the dividend (reporting
that on a 1099-Div), and the owner (after there's less TO pay out because the C-Corp already paid it's taxes) pays taxes on the dividends
; hence, double taxation.
Here's the IRS guidance:
From there (first paragraph):
" For federal income
tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income
or loss, pays taxes and distributes profits to shareholders
"The profit of a corporation is taxed to the corporation when earned, and then is taxed to the shareholders when distributed as dividends. This creates a double tax. The corporation does not get a tax deduction
when it distributes dividends to shareholders. Shareholders cannot deduct any loss of the corporation."
IRS, of course, IRS only administers the Law. The Tax Code (created by congress) can be found at title 26 U.S. Code.
Corporation and corporate distributions
are covered in 26 U.S. Code Chapter 1, Subchapter C
Please let me know if you have questions at all...