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A term that describes a profit-making corporation whose shareholders have applied for and received subchapter s corporation status from the internal revenue service (irs). electing to do business as an s corporation lets shareholders enjoy limited liability status, as would be true of any corporation, but be taxed as a pass-through tax entity, where income taxes are reported and paid by the owners, like a partnership or sole proprietor. (a regular, or c, corporation is taxed as a separate entity from its owners.) to qualify as an s corporation, a number of irs rules must be met, such as a limit of 100 shareholders and u.s. citizenship for all shareholders.

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