What distinguishes an S corporation from other corporations?

An S corporation is specifically characterized by its restriction on the number of shareholders, which is capped at 100. This limitation is significant because it allows S corporations to maintain a more manageable ownership structure typically suited for smaller businesses while still benefiting from certain corporate advantages.

This designation is beneficial for taxation purposes, as S corporations allow profits and losses to be passed through to shareholders, thereby avoiding the double taxation faced by C corporations. This distinction is valuable for individuals seeking a favorable tax treatment while still maintaining a corporate structure. The condition that limits the shareholder count is a pivotal reason S corporations appeal to small business owners.

The other options don't reflect the defining characteristics of an S corporation. For example, the notion that it can have no limit on the number of shareholders and that it can be owned by a single person are attributes that do not align with the S corporation's regulations. Additionally, unlike C corporations, an S corporation does not face taxation on its profits at the corporate level, making the idea of it paying corporate taxes on all profits incorrect. Thus, option C accurately highlights the specific legal and operational framework that defines an S corporation.