Are C corp pass through entities in the US?

No, C corporations are not pass-through entities in the United States.

A C corporation is a separate legal and tax-paying entity. This means the corporation pays federal and, where applicable, state corporate income taxes on its profits. If the corporation distributes profits to shareholders as dividends, those dividends are taxed again on the shareholders' personal tax returns. This tax treatment is commonly known as double taxation.

In contrast, pass-through entities do not pay income tax at the business level. Instead, profits and losses pass directly to the owners, who report them on their individual tax returns. Common pass-through entities include:

• S Corporations
• Limited Liability Companies (LLCs) (unless taxed as a C corporation)
• Partnerships
• Sole Proprietorships

Although C corporations are subject to double taxation, they offer several advantages. These include easier access to investment capital through stock issuance, unlimited numbers of shareholders, and the ability to provide stock-based compensation to employees and executives. For many growing businesses and startups seeking outside investment, these benefits can outweigh the tax disadvantages.

Choosing between a C corporation and a pass-through entity depends on factors such as ownership structure, fundraising plans, tax considerations, and long-term business goals. Professional legal and tax advice is recommended before selecting a business structure.