All About Singapore Income Tax And Its Benefits

In the previous decade, the IRS issued its so-called "Check the Box" regulations. Effective 1997, the regulations allowed taxpayers to select the tax status of a business entity regardless of its corporate (or non-corporate) character. Thus, in order to gain corporation tax benefits, a business entity with more than one owner can elect to be classified as either a partnership or a corporation. Thus, a business entity with more than one owner can elect to be classified as either a partnership or a corporation and in the process gain corporation tax benefits. On the other hand, an entity with only one owner can elect to be classified as a corporation or a sole proprietorship. In the event of default (that is, where taxpayer does not make an election), multiple-owner businesses are classified as partnerships and single-person businesses as sole proprietorships.

A business entity will have access to corporation tax benefits if it is actually incorporated under state law or one that is required to be a corporation under federal law. Since limited liability companies are not automatically treated as being incorporated under state law, it is necessary that they must elect either corporation or partnership status.

Corporation tax benefits under Federal income taxation may acquire more meaning if compared with the treatments to individual taxpayers.

The gross income determination for corporations and individuals is done in the same manner. To name a few, this includes income derived from business, compensation for services rendered, gains from dealings in property, interest, rents, dividends. Certain inclusions of gross income are included in Individual and corporation tax benefits, however, less exclusions are given to corporate taxpayers. An example is when both classes of taxpayer may exclude interest on municipal bonds from gross income.

Similar treatment is given to Gains and losses from property transactions. Non-recognition of gain or loss on a like-kind exchange is allowed by individual and corporation tax benefits, when non-taxable exchanges are concerned. There could be deferment of recognized gain by both on an involuntary conversion of property. Other than certain exceptions, both corporations and individuals are not allowed to deduct losses on sales of property to related parties or on wash sales of securities. The business deductions of corporations also parallel those of individuals, although certain credits that are personal in nature, like child care credit, are not available to corporations.