Entity and Trust Taxation

What this video covers

• Why C-corporations face double taxation at a flat 21% corporate rate, then again on non-deductible dividends to shareholders
• How S-corporations avoid double taxation as pass-through entities, and the three strict limits the exam tests: 100 shareholders max, one class of stock, U.S. citizens or residents only
• What partnerships and limited liability companies (LLCs) do with income and losses, and why a limited partner's K-1 income counts as passive income for passive loss rules
• Why trusts hit the top 37% rate at roughly $16,000 of retained income due to compressed brackets, and why distributing income to beneficiaries is almost always the tax-efficient recommendation
• How grantor trusts differ: the grantor is treated as owner, so income bypasses trust taxation and lands on the grantor's personal return
• How real estate investment trusts (REITs) avoid corporate tax by distributing at least 90% of taxable income, and why REIT distributions are ordinary income not qualified dividends
• How master limited partnerships (MLPs) use K-1 pass-through reporting, and why distributions are often return of capital that reduces basis rather than immediate taxable income