B-Corps and Social Purpose Corporations

Definition

A benefit corporation is a for-profit corporation, formed under a state benefit-corporation statute, whose directors must weigh a stated public benefit alongside shareholder returns; a social purpose corporation is a similar state-law form, and a Certified B Corporation is a private certification by the nonprofit B Lab, not a legal form. No federal law creates any of these labels: for federal tax, a benefit or social purpose corporation is an ordinary corporation,^[3] taxed at the 21 percent corporate rate unless it elects S status.^[1]

Federal law

Formed under state law. No Act of Congress creates it; the federal laws below apply to it as described.

1. Tax Cuts and Jobs Act (popular name), Pub. L. 115-97, § 13001, 131 Stat. 2096. Sets the 21 percent corporate income tax rate that applies to benefit and social purpose corporations as ordinary C corporations; federal law gives them no special tax treatment. Official text: govinfo.gov, U.S. Government Publishing Office.
2. Internal Revenue Code of 1954, Pub. L. 83-591, ch. 736, § 11, 68A Stat. 11. Imposes the federal income tax on every corporation (26 U.S.C. § 11(a)), including benefit and social purpose corporations. Official text: govinfo.gov, U.S. Government Publishing Office.

Federal regulations

Rules issued by federal agencies under the laws above.

3. Business entities; definitions, 26 CFR 301.7701-2 (Internal Revenue Service, Department of the Treasury). Classifies an entity organized under a state statute that calls it a corporation as a corporation for federal tax purposes. Official text: govinfo.gov, U.S. Government Publishing Office.