The Income Tax of Legal Persons in the United States. Under the corporate system in force in the United States, it is possible to distinguish the following different forms of companies:
The C-type capital company (C-corporation) or classic type capital company characterized by the possession of a legal personality and a corporate assets that are perfectly independent and distinct from the shareholders;
The capital company of type S (S-corporation) which, from a legal point of view, is identical to that of type C while fiscally, but is characterized by the possibility of opting, in the presence of certain requirements (such as the residence of the shareholders in the United States, the existence of only one class of shares and a maximum number of shareholders), for a “transparent” tax regime whereby income is taxed only once, directly to the shareholders;
The Limited Liability Company, a recently established company in the commercial and tax legislation of the United States, which in addition to the benefit of limited liability of the shareholders, typical of joint-stock companies, provides for the possibility of applying the “transparent” taxation regime, similarly to people;
The General Partnership which provides for the unlimited and joint liability of the shareholders who respond with their own assets for the obligations assumed by the company. From a fiscal point of view, the income produced by the partnership is not attributed to the latter but is attributed to individual shareholders by means of the so-called “transparent” taxation regime;
The Limited Partnership, similar to our limited partnership since it contains some limited partners who benefit from the limited financial liability to the amount of the share conferred.
The following are subject to corporate income tax: C-corporations (with the exception of partnerships, S-corporations and LLCs if they are taxed “for transparency” by their shareholders); associations; insurance companies; the banks. US companies are taxed on their so-called income. worldwide, that is, without having regard to the location of the source of income and without detecting the place of exercise of its business or where the management and administrative center of the same is located.
The income of the companies is quantified on the basis of the regularly kept accounting records. The method of accounting for administrative events ordinarily envisaged is the accrual method, unless the volume of gross revenues in the previous three years has not exceeded the limit of 7 million dollars (in this case the criterion of cash (cash method) .The data obtained from the accounting are subject to a series of subsequent adjustments that make it possible to determine the taxable income.
It is possible to deduct all the expenses incurred for carrying out the business activity, such as: expenses of an “ordinary” nature; the depreciation rates; interest expense, subject to limitations; federal and local income taxes; contributions to charities; losses not covered by insurance; non-recoverable credits; research and development expenses (they are fully deductible in the relevant year, that is, they can be amortized over 60 months); organizational expenses; start-up costs; expenses related to the processing of natural resources (oil, gas, minerals, etc.).
Corporate tax and rates
The federal corporate income tax is configured as a progressive tax by income brackets; since 2011, the tax rates are between 15 and 35%.
There are also two additional rates, equal to 38 and 39% respectively, in correspondence with two intermediate income brackets, which have the function of “correcting” the tax inequalities emerging near the upper limits of the intermediate income brackets.
|Income brackets (in USD)||Tax rates|
|Up to 50,000||15%|
|50.001 – 75.000||$ 7,500 + 25% on income exceeding $ 50,000|
|75.001 – 100.000||$ 13,750 + 34% on income exceeding $ 75,000|
|100.001 – 335.000||$ 22,250 + 39% on income exceeding $ 100,000|
|335.001 – 10,000,000||$ 113,900 + 34% on income exceeding $ 335,000|
|10,000.001 – 15,000,000||$ 3,400,000 + 35% on income in excess of $ 10 million|
|10,000.001 – 15,000,000||$ 5,150,000 + 38% on income exceeding $ 15 million|
Companies, like natural persons, are also subject to the Alternative Minimum Tax (AMT), which is calculated on a wider tax base than ordinary taxation, using a single tax rate of 20%. The function of this tax is to ensure that all companies with significant income contribute to the federal tax burden while being entitled to a certain number of exemptions, deductions and tax credits.
The alternative tax is due if the amount of the same exceeds the tax calculated with the ordinary taxation method.
The AMT does not apply to small businesses or to companies that have an average amount of revenues, referring to the last three years, of less than 7.5 million dollars.
In the next article, we will explain detail of state and local taxes.