Final answer:
No, any corporation with more than 100 shareholders is not automatically considered a C corporation for federal income tax purposes. The classification is determined by the corporation's structure and the choices made by its owners, with the default classification being an S corporation.
Step-by-step explanation:
No, any corporation with more than 100 shareholders is not automatically considered a C corporation for federal income tax purposes. The classification of a corporation for tax purposes is determined by the corporation's structure and the choices made by its owners. The default classification for a corporation with more than 100 shareholders is actually an S corporation, unless the shareholders elect otherwise.
A C corporation is subject to double taxation, where the corporation pays taxes on its profits and then the shareholders pay taxes on the dividends they receive. On the other hand, an S corporation is considered a pass-through entity, where the income and losses pass through to the shareholders and are reported on their individual tax returns. This avoids the issue of double taxation.
It's important to note that there are specific criteria and regulations that must be met for a corporation to qualify as an S corporation. These include restrictions on the number and types of shareholders, as well as limitations on the types of stock that can be issued. Therefore, not all corporations with more than 100 shareholders may be eligible to elect S corporation status.