Switching C to S Corps

[Snaggletooth]

How many of you have C corps simply because of the 15% ceiling on dividends?

And a "stand-by" plan to change them to S Corps when the 15% ceiling expires and does not get renewed?

Certainly this is not the only factor in deciding whether a C Corp is preferable, but for a couple of mine, this was the factor that tipped the scales. If the 15% ceiling is lifted, a 2553 will be forthcoming.

[OtisMozzetti]

Rate Ceiling Might go up after 2010, or even sooner

My understanding is that the 15% rate ceiling on dividends and capital gains is in the law as now enacted through 2010.

If that 15% rate ceiling goes up starting in 2011, or if it were to be raised even sooner, that would make the "double taxation of dividends" once again a more important issue, as you noted.

[JON]

Nancy, heads the House,

says it is gone next year. In fact with the projections of the House and Senate the Democrats may be bullet proof. The 15% should have never been considered in the C or S Corp conversation. You have already paid at least15% of corporate tax just at the federal level and then you pay another 15%(?) when you draw it out to yourself. You may have had savings, but not much. I think the Dems will have control. Supposedly unless you are making more than $250,000 you will be better off. So now most of us are promised more money and low(er) cost medical costs. I think there are probably a lot of other freebees will be given to us. We will just have to get use to getting all these.

[Snaggletooth]

I can hardly wait

Oh boy! I don't make $250,000 so now I can look forward to all these goodies falling in my lap and lower medical bills too!!

Last time her party promised this was with Mr. Clinton, who was going to finance these wonderful things with a tax on the very wealthy.

By the time it was over, I guess I never realized just how "wealthy" I really was.

If we make the change to S corps, the way things are now means we'll have to separately track the Earnings and Profits forever unless they become extinguished. Sometimes I wish they would put these E&P out of their misery by turning them out on a "FIFO" method as taxable dividends.