WHY FLOW-THROUGH ENTITIES

ARE WORTH MORE THAN C CORPORATIONS

by

Charles R. Beaudrot, Jr., Partner

Morris, Manning & Martin, LLP

(404) 504-7753

cbeaudrot@mmmlaw.com

It is one of the great fundamentals of our income tax system that businesses that are organized and taxed as C corporations for income tax purposes are subject to two levels of tax.  That is to say, both current earnings and realized appreciation are taxed first at the corporate level and a second time when the earnings or appreciation are distributed to the stockholders.

A purchaser’s preferred acquisition structure for both tax and non-tax reasons is

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