+1 862 207 3288 C Corporation is treated as a separate entity for taxation purposes. Therefore, during an asset sale process the company is required to pay corporate tax on the gain from sale of assets at ordinary tax rate. The after-tax proceeds from asset sale is then distributed to shareholders. This dividend income is then again taxed at capital gain tax rate. Therefore, in C Corporation gain from asset sale is taxed twice (double taxation).
S Corporation is not treated as a separate entity and the profits of the company are added to shareholders’ income. Therefore, the entity does not require to pay any taxes on the gains from asset sale. After them being transferred to shareholders, it will be taxed at capital gain tax rate.
