Tax Rates: Corporation vs. Partnership

There are three conditions that can characterize the way a business operates: (1) it earns a profit, and then gives that profit to its owners; (2) it earns a profit, and then retains a portion of it; (3) it loses money. How does it matter whether a business is classified as a partnership or a corporation under each of these three conditions?

A corporation that earns a profit is taxed on the income that it is earned. The rate is 15% for taxable income that is not over $50,000; 25% for taxable income that is not over $75,000; 34% for income that is not over $100,000; 39% for taxable income that is not over $335,000; 34% for taxable income that is not over $10,000,000; 35% for taxable income that is not over $15,000,000; 38% for taxable income that is not over $18,333,333; and 35% for taxable income beyond $18,333,333.

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