A “corporation” is a legal entity created under a state or other statute that allows “incorporation” by persons who become the “shareholders” of the corporation. In general, the corporation’s organizers complete appropriate forms and file them with the state (or other jurisdiction) in which the corporation will be incorporated. Those organizers become the corporation’s initial shareholders once the corporation is recognized by the state. Corporate shareholders may be individuals, other corporations, or other entities such as partnerships. In general, an entity recognized as a corporation under state law is also treated as a corporation for federal tax purposes.

 

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