Editing Taxation in the United States (section)

===Business entities===
[[File:US Effective Corporate Tax Rate 1947-2011 v2.jpg|thumb|The U.S. federal [[effective tax rate|effective]] corporate income tax rate is lower than the highest nominal rate, which can be significant in part because of [[tax shelter]]s such as [[tax haven]]s.<ref>[http://levin.senate.gov/download/repatriating-offshore-funds "Repatriating Offshore Funds"] {{Webarchive|url=https://web.archive.org/web/20141206001150/http://levin.senate.gov/download/repatriating-offshore-funds |date=2014-12-06}} ''U.S. Senate Committee on Homeland Security and Governmental Affairs, Permanent Subcommittee on Investigations'', October 11, 2011</ref><ref>[http://uspirgedfund.org/sites/pirg/files/reports/Picking_Up_the_Tab_USP.pdf "Picking Up the Tab"] ''U.S. Public Interest Research Group'', April 2012.</ref>]]
{{Main|Corporate tax in the United States|S corporations|Partnership taxation in the United States}}

Corporations must pay tax on their taxable income independently of their shareholders.<ref name="26 USC 11; IRS Publication 542"/> Shareholders are also subject to tax on dividends received from corporations.<ref>{{USCSub|26|61|a|7}}.</ref> By contrast, partnerships are not subject to income tax, but their partners calculate their taxes by including their shares of partnership items.<ref>{{USC|26|701}}; IRS [https://www.irs.gov/publications/p541/index.html Publication 541].</ref> Corporations owned entirely by U.S. citizens or residents ([[S corporation]]s) may elect to be treated similarly to partnerships. A [[limited liability company]] and certain other business entities may elect to be treated as corporations or as partnerships.<ref>[http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=c3b3dc02944497a4e3612aa948844ae3&rgn=div5&view=text&node=26:18.0.1.1.2&idno=26#26:18.0.1.1.2.20.69.2 26 CFR 301.7701-2]; IRS [https://www.irs.gov/pub/irs-pdf/f8832.pdf Form 8832].</ref> States generally follow such characterization. Many states also allow corporations to elect S corporation status. Charitable organizations are subject to tax on business income.<ref>{{USC|26|512}}; IRS [https://www.irs.gov/publications/p598/ch02.html Publication 598].</ref>

Certain transactions of business entities are not subject to tax. These include many types of formation or reorganization.<ref>{{USC|26|332|368}}; IRS Publication 542.</ref>