Corporate Taxation

REG loves to make you reconcile book income to taxable income on Schedule M-1 (M-3 for larger filers): add back the federal income tax expense and non-deductibles (50% of meals, fines, life-insurance premiums where the corporation is the beneficiary), then subtract the dividends-received deduction. Watch the flat 21% rate and the DRD tiers — 50%/65%/100% keyed to ownership (under 20% / 20–80% / 80%+), capped by a taxable-income limit unless the full DRD creates an NOL. Corporate capital losses offset only capital gains (carry back 3, forward 5), and post-2017 NOLs carry forward indefinitely but offset just 80% of taxable income.

The classic trap is mixing up entity types: unlike an S corporation or partnership, a C corp’s losses stay trapped at the entity and never flow to shareholders. Skip the individual rules — no standard deduction and no preferential capital-gains rate (corporate gains hit the same 21%). For charitable contributions, OBBBA now imposes a 1%-of-taxable-income floor (effective for tax years after 2025, gifts below 1% are nondeductible) underneath the long-standing 10%-of-taxable-income ceiling — older banks still teach only the 10% cap.