S Corporation*
An S corporation is a form of corporation, allowed by the Internal Revenue Code (IRS). The code is very explicit on how and when this election is made and the number of shareholders this type of corporation can have. Since this type of corporation pays no income tax, all gains and losses of the corporation pass through to the individual shareholders in proportion to their holdings. Thus S Corporation enables the company to enjoy the benefits of incorporation but be taxed as if it were a partnership. Also called Subchapter S Corporation.