What is a primary benefit of an S Corporation regarding taxation?

An S Corporation provides the significant benefit of not being subject to federal corporate income taxes directly. Instead, the income, losses, deductions, and credits pass through to the shareholders, who report this information on their individual tax returns. This pass-through taxation helps avoid the "double taxation" commonly faced by C Corporations, where income is taxed at both the corporate level and then again at the individual level when distributed as dividends. Therefore, S Corporations effectively allow their shareholders to enjoy a tax structure that can be more favorable in many cases, as they pay taxes only on the income they actually receive rather than on the corporation's earnings itself. This structure can lead to lower overall tax liabilities for shareholders.

In contrast, the other options do not accurately reflect the core advantages of S Corporations regarding taxation.