2.1.1.a: C Corporations

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Abstract

When a business plan is developed, consideration must be given to the form in which the business is to be conducted. The several possibilities start with a general business corporation, sometimes referred to as a "C Corporation" for that subchapter of the Internal Revenue Code, Subchapter C, which governs the tax attributes of corporations generally. A corporation is an artificial legal entity chartered by one of the 50 states[1] and endowed by the legislature with certain valuable privileges; it follows that its powers are limited to those expressly or impliedly set out by statute. With exceptions not generally significant[2], a corporation is managed by its directors. The general corporation laws in each state vary in detail, but they follow a generally similar pattern. The Model Revised Business Corporation Act, drafted by a select committee of the American Bar Association, is a composite of the most advanced thinking. The