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An association, i.e., business organization
authorized by the state or other authority. Two or more people
are usually required to form a corporation. It has rights and
limited powers and is governed by a state charter and federal
and state statutes. It has real existence and may act as a continuing
legal entity, i.e., it continues to exist after the initiators
die. It may own and convey property, be a debtor, bring on suits,
and be sued by other corporations and people. A corporation has
a distinct name and a specific purpose.
A corporation must issue stock. The amount
and type or types issued are specified by the corporation's charter.
People who own stock are called stockholders or shareholders.
Stock may be held by many shareholders or by a single person.
The corporation, however, is distinct and separate from its shareholders.
Control and management of a corporation
is headed by a board of trustees, majority stockholders, or a
single person. Shareholders of a corporation generally enjoy limited
personal legal liabilities with respect to corporation activities
and debt. The limit is equal to their respective amounts of investment.
There are some exceptions, e.g., where shareholders with controlling
management interests are, through the corporation, willfully involved
in fraud or other illegal activity and legal claims against them
exceed their investment. Personal liability may result if a corporation
goes bankrupt as a result of insufficient working capital at the
start, i.e., where personal guarantees are made for loans received
by the corporation. Or, where other contracts or intentions may
override the corporate veil of limited liability. See: BUSINESS,
COMPANY, AMALGAMATION, ENTITY, DISSOLUTION, EMPLOYER, PARTNERSHIP,
BANKRUPTCY, CORPORATION
under "Subsidiary," "Merger," "Dividend,"
CONTRACT, RECORD COMPANY
under "Majors," "Minors," "National Record
Company," FEDERAL TAX FORMS under "Form W-9," "Form
966," "Form 1138," "Form 1139," "Form
2220," "Form 5310," "Form 5452," and
"Form 7004."
There are many types and classifications of domestic and foreign corporations with corresponding tax obligations…
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