the choice by a small corporation to be treated under "subchapter S" by the Internal
Revenue Service, which allows the corporation to be treated like a partnership for
taxation purposes. This may provide the benefit of passing losses (particularly
in the early development of the business) to the stockholders. Technically the term
"subchapter S corporation" is a misnomer since it is a normal corporation except
for the election (choice) which is filed on a form provided by the IRS normally
immediately after incorporation, which election can be withdrawn before the beginning
of a future taxable year. This election is usually prepared and filed with the IRS
by the company's accountant and not the incorporating attorney.
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