Explain the difference between an S and a C corporation.

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Part $1$

The profits and losses of the

$$

S corporation

C corporation

are passed directly to shareholders and are not subject to corporate$$ taxes, while the

$$

S corporation

C corporation

must first pay taxes on any profits before passing the$$ after$-$tax profits on to shareholders. In$$ addition, the

$$

S corporation

C corporation

can have no more than $100$ shareholders, all of whom must be U$.$S$.$ citizens or residents. The

$$

S corporation

C corporation

does not have any such restrictions on its shareholders.$($Select from the$$ drop$-$down menus.$)$