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Pittsburg, Kansas | Couple of problems with it. Or potential problems at least in C corporations.
One is the corporations get to pay a tax then the owners get to pay a tax again when they get the money back out either in wages or dividends. Back when we incorporated the first 50k of corporate income was taxed at 15%. We had three corporations so we could take in up to 150k at that rate. Plus the low rate bracket in our personal. There was incentive to incorporate as long as a business was growing.
Current corporate rate is 21% if I recall correctly. Plus personal is able to take in more at a lower rate than used to. So some of the tax advantages have lessened.
The theory when we established the corporations was when retired we would be in a lower tax bracket and take dividends out for income. Well the lower tax bracket was only a dream, but dividends are treated more favoribly than regular income so there is that.
The other thing is we thought the corporations would continue on being run either by family or employees. But life circumstances change. Now we no longer need the corporations but they have a pot load of assets within we get to pay taxes again if we want the money back out. Not an entirely terrible problem to have. But had we a crystal ball, knowing what we know now, we probably would have made different decisions years ago.
Even Warren Buffet says Berkshire as a holding company corporation is a terrible way to hold assets from a tax management situation.
There are plusses and minuses. And the rules of the game can change midstream.
Fortunately we never put land in the corps. Now all they have is stock investments and cash.
Edited by John Burns 1/29/2026 10:58
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Generational Wealth - again - sort of
