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C corporations offer better tax treatment for fringe benefits than S corporations. But don't avoid an S corporation election simply because of fringe benefits.

S corporations may wind up with the same tax treatment as C corp owners, especially when it comes to health insurance. Just make sure you establish a formal plan that says you will pay health insurance premiums for a certain class of employees, such as management employees.

What's deductible, what's not

Here are the rules: C corporations can offer several tax-advantaged fringe benefits to their employees, including owner/employees. The corporation can write off the outlays while the employees can exclude them from taxable income.

The rules governing fringe benefits for S corporation employee/owners are not as favorable. Any S corporation employee/shareholder who owns (directly or indirectly) more than 2 percent of the company's stock faces limits ...(register to read more)

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