IRS Publication 542


DEFINITION of 'IRS Publication 542'

A document published by the Internal Revenue Service (IRS) that provides information on the general tax rules domestic corporations must follow. IRS Publication 542 outlines the type of organizations that are taxed as corporations, the accounting methods typically used, the deductions allowed and the tax tables to be used.

BREAKING DOWN 'IRS Publication 542'

Corporations are treated differently than partnerships, in which gains and losses are passed through to partners, and S Corporations, where gains and losses are passed through to shareholders.

Shareholders in a corporation can receive income from the business itself in the form of dividends, which can be taxed both on the corporate level (prior to distribution) and on the individual level (when sent to shareholders).

Corporations are still subject to the alternative minimum tax (AMT).

  1. Shareholder

    Any person, company or other institution that owns at least one ...
  2. Double Taxing

    A tax law that causes the same earnings to be subjected to taxation ...
  3. Subchapter S (S Corporation)

    A form of corporation that meets the IRS requirements to be taxed ...
  4. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  5. Alternative Minimum Tax - AMT

    A tax calculation that adds certain tax preference items back ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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