C Corporations: Domestic, Foreign, and Common Stock (C-Corps)

Definition

A C corporation is any corporation that is not an S corporation for the year,^[3] so the corporation itself pays federal income tax on its profits,^[2] at a flat 21 percent rate.^[1] It is domestic if created or organized in the United States or under federal or state law, and foreign otherwise; common stock is its ordinary ownership share.^[4]

Federal law

Formed under state law. No Act of Congress creates it; the federal laws below apply to it as described.

1. Tax Cuts and Jobs Act (popular name), Pub. L. 115-97, § 13001, 131 Stat. 2096. Set the flat 21 percent corporate income tax rate in 26 U.S.C. § 11(b) for taxable years beginning after December 31, 2017. Official text: govinfo.gov, U.S. Government Publishing Office.
2. Internal Revenue Code of 1954, Pub. L. 83-591, ch. 736, § 11, 68A Stat. 11. Imposes the federal income tax on the taxable income of every corporation (26 U.S.C. § 11(a)). Official text: govinfo.gov, U.S. Government Publishing Office.
3. Subchapter S Revision Act of 1982, Pub. L. 97-354, § 2, 96 Stat. 1669. Defined "C corporation" as a corporation that is not an S corporation for the year (26 U.S.C. § 1361(a)(2)). Official text: govinfo.gov, U.S. Government Publishing Office.
4. Internal Revenue Code of 1954, Pub. L. 83-591, ch. 736, § 7701, 68A Stat. 911. Defines "corporation," "domestic," and "foreign" for federal tax purposes (26 U.S.C. § 7701(a)(3)-(5)); does not create corporations, which are formed under state law. Official text: govinfo.gov, U.S. Government Publishing Office.

Federal regulations

Rules issued by federal agencies under the laws above.

5. Business entities; definitions, 26 CFR 301.7701-2 (Internal Revenue Service, Department of the Treasury). Treats an entity organized under a statute that calls it incorporated or a corporation as a corporation for federal tax purposes. Official text: govinfo.gov, U.S. Government Publishing Office.