However, corporations may provide certain employee benefits that are tax-deductible. Accident and health insurance, group life insurance, and certain expenditures for recreation facilities all qualify. However, these benefits may be taxable to the employees and subsequently to the shareholders. There is greater continuity for businesses organized under subchapter S than for sole proprietorships or partnerships. Upon death of shareholders, their shares of the corporations are transferred to the heirs and the subchapter S election is maintained.
Surveys suggest that the major reason farms incorporate is for estate planning.
The corporate form allows for the transfer of shares of stock either by sale or gift. This is much easier than transferred assets by deed. A chief advantage of the corporate form is the limited liability afforded the owners. However, like a partnership, a properly constituted LLC will be treated as a pass-through entity for federal income tax purposes. No federal tax, and presumably, no state tax, will be imposed on the LLC itself, the members include any income or loss on their own tax returns.