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. Subchapter S (S Corporation)

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

    A tax law that causes the same earnings to be subjected to taxation ...
  4. Alternative Minimum Tax - AMT

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

    A United States government agency that is responsible for the ...
  6. Economic Justice

    Economic justice is a component of social justice. It's a set ...
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. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  2. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
  3. Net Sales

    The amount of sales generated by a company after the deduction of returns, allowances for damaged or missing goods and any ...
  4. Over The Counter

    A security traded in some context other than on a formal exchange such as the NYSE, TSX, AMEX, etc. The phrase "over-the-counter" ...
  5. Earnings Before Interest After Taxes - EBIAT

    A financial measure that is an indicator of a company's operating performance. EBIAT, which is equivalent to after-tax EBIT ...
  6. Direct Participation Program - DPP

    A business venture designed to let investors participate directly in the cash flow and tax benefits of the underlying investment. ...
Trading Center