4 Tax Advantages of Using Equity (U.S. Corporate Tax)

Funding a corporation with rather is advantageous because the corporation gets a tax deduction for interest expense, but not for paying dividends.

Funding a corporation with equity instead of debt, however, can provide several tax advantages to shareholders:

1. Noncorporate shareholders can exclude gains from the sale of "qualified small business stock"

2. Individual and partnership shareholders can treat losses as ordinary (rather than capital losses) when they sell the stock of a small business or the stock becomes worthless

3. Noncorporate shareholders receive preferential tax rates on qualified dividends, but not on interest income. Corporate shareholders don't get preferential tax rates on dividends received, but they can take the Dividends Received Deduction

4. Shareholders are not taxed when they receive strictly stock in a Section 351 transaction, but any debt they receive is taxed as boot

—
Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education accessible to all people.
—
SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS:
• A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING
• A 44-PAGE GUIDE TO U.S. TAXATION
• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS
• MANY MORE FREE PDF GUIDES
http://eepurl.com/dIaa5z
—
GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT
https://edspira.thinkific.com
—
LISTEN TO THE SCHEME PODCAST
Apple Podcasts: https://podcasts.apple.com/us/podcast...
Spotify: https://open.spotify.com/show/4WaNTqV...
Website: https://www.edspira.com/podcast-2/
—
GET TAX TIPS ON TIKTOK
  / prof_mclaughlin  
—
ACCESS INDEX OF VIDEOS
https://www.edspira.com/index
—
CONNECT WITH EDSPIRA
Facebook:   / edspira  
Instagram:   / edspiradotcom  
LinkedIn:   / edspira  
—
CONNECT WITH MICHAEL
Twitter:   / prof_mclaughlin  
LinkedIn:   / prof-michael-mclaughlin  
—
ABOUT EDSPIRA AND ITS CREATOR
https://www.edspira.com/about/