Some entities in United States are treated as corporations for tax purposes. The tax which is imposed on these corporations according to the defined laws is called corporate tax. The corporate tax is applicable at the Federal level and is also implied in most of the states and in few local jurisdictions.
The tax rules of state and local governments may vary across different jurisdictions but they are mostly based on the concepts and definitions of the Federal corporate tax system.
The tax rate applicable on corporate taxable income at the Federal level varies from 15 percent to 35 percent. However, the taxable income can differ as compared to the book income in two ways; the time of income and tax deductions as well as the amount which is taxable. Apart from these taxes, corporations are also liable to pay alternative state taxes and Federal minimum alternative tax. Similar to the way individuals file tax returns every year, it is mandatory for corporations to file their returns on time. Estimated tax payments are also to be made by corporations on a quarter-to-quarter basis. A group of corporations can also file a consolidated corporate tax return.
The taxable income for corporations is also determined the same way it is done for individuals. The only difference is the large sums of money involved in this calculation. There are some corporate transactions that are exempted from being considered for taxes. Most of the formations, some kinds of acquisitions, mergers and liquidations are instances of such transactions. A corporation can also be subject to pay income taxes in foreign countries and for such taxes, it might be granted with foreign tax credit. In most of the cases, the shareholders of a corporation are not required to pay the taxes imposed directly on the corporate income. They are supposed to pay the taxes on dividends which are paid by the corporation.