To Avoid Tax, Set Up as S-Corp or C-Corp?

The debate on proposed tax rate increases for the country's wealthiest people has just begun, and the potential increases would not happen until 2011. Still, tax experts say it is not too early for small business owners to think about defensive strategies. Whether they're contemplating moving from S-corporation to C-corporation status, accelerating income, or deferring compensation, their decisions should be thought through in the larger context of their business and personal goals, says Lester Law, senior vice president at U.S. Trust's National Wealth Strategies Group (BAC), in Naples, Fla. He spoke recently to Smart Answers columnist Karen E. Klein; edited excerpts of their conversation follow.

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