What is unique about the taxation of corporations?

The unique aspect of the taxation of corporations is that they are taxed as separate legal entities. This means that a corporation is treated distinctly from its owners (shareholders) for tax purposes. As a separate legal entity, a corporation must file its own tax returns and pay taxes on its profits at the corporate tax rate. This separation is fundamental because it establishes the corporation as an independent body that can incur debts, sue, and be sued.

This distinction also leads to the potential for double taxation, where profits are taxed at the corporate level and then again when distributed as dividends to shareholders. Understanding this separation is crucial for those studying business licensure, as it underpins many legal and financial considerations in corporate operations.