Can S-Corp Make Investments Before Tax?

[netfocus]

Florida

I have a single member design business taxed as an S-Corp.

Can my corporation take business income and buy land or stocks as an investment by the business, therefore paying no personal income tax on these funds?

If No to the previous question, then could a C-Corp do something similar to this and hold investments without even paying corporate income tax? (such as General Electric or other holding companies that buy assets - did they pay corporate income tax first on the money they used to buy those assets? OR, did they buy those assets purely with company profits, tax free?)

 

[LdiJ]

Florida

I have a single member design business taxed as an S-Corp.

Can my corporation take business income and buy land or stocks as an investment by the business, therefore paying no personal income tax on these funds?

If No to the previous question, then could a C-Corp do something similar to this and hold investments without even paying corporate income tax? (such as General Electric or other holding companies that buy assets - did they pay corporate income tax first on the money they used to buy those assets? OR, did they buy those assets purely with company profits, tax free?)

The answer to both questions is no. The corporation can choose to use its profits to purchase investments, but the corporation cannot avoid tax on the profits, if a C corp, and the shareholders cannot avoid tax on the profits, if an S corp.

 

[netfocus]

Thanks for the response.

 

[CraigFL]

But you only pay tax when the asset is sold and a profit is realized??

 

[tranquility]

I think the question involves an attempt to shield corporate earnings by buying capital assets as an investment.