form to the Subchapter C Corporation. By contrast, a special rule included in the tax law changes in 1986 for closely held C corporations, with respect to passive activity restrictions on loss recognition, provides a means for some tax payers to continue to receive the benefits of tax shelters, through retention of the C type corporation form of organization (Tax Management, Inc., 1987, p. 114). In these instances, it would prove beneficial (in the context of federal income tax liability) for shareholders to retain the Subchapter C Corporation form of organization, as opposed to switching to either a partnership or to a Subchapter S Corporation form of organization.
The generation of capital is one of the most pressing problems facing any small business venture. A great variety of capital sources exist, along with an equally great variety of methods by which these sources may be tapped by a person starting or operating a small business. For many firms, however, access to both capital so
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