What is C Corporation?
Definition A C corporation is a legal entity taxed separately from its owners, paying corporate income tax on its profits at a flat federal rate. When those profits are distributed to shareholders as dividends, the shareholders pay tax again, a pattern known as double taxation. It files Form 1120 and is the default structure for corporations that do not elect S status.
Double taxation is a real cost, but C corporations can offer benefits for retaining earnings, raising outside investment, or providing certain fringe benefits, so the trade-off is a core entity-selection question.