IRS Publication 542

AAA

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.

INVESTOPEDIA EXPLAINS '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).

RELATED TERMS
  1. Shareholder

    Any person, company or other institution that owns at least one ...
  2. Alternative Minimum Tax - AMT

    A tax calculation that adds certain tax preference items back ...
  3. Internal Revenue Service - IRS

    A United States government agency that is responsible for the ...
  4. Subchapter S (S Corporation)

    A form of corporation that meets the IRS requirements to be taxed ...
  5. Double Taxing

    A tax law that causes the same earnings to be subjected to taxation ...
  6. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
Related Articles
  1. The Basics Of Corporate Structure
    Investing Basics

    The Basics Of Corporate Structure

  2. Tax Tips For The Individual Investor
    Retirement

    Tax Tips For The Individual Investor

  3. How And Why Do Companies Pay Dividends?
    Investing Basics

    How And Why Do Companies Pay Dividends?

  4. Dividend Facts You May Not Know
    Investing Basics

    Dividend Facts You May Not Know

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center