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Dividends Versus Distributions In ESOP Planning

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C corporations issue dividends. S corporations issue distributions. What’s the difference? In ESOP planning, you might find that S corporation distributions mean the difference between being able to finance an ESOP transaction or not. In a C corporation, you can use dividends to avoid double taxation on at least part of the company’s income. This article is an in-depth review of the uses, and limits, on dividends and distributions in an ESOP company.

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