In recent decades, many family businesses have been structured as flow-through entities, such as S corporations (S corps) or limited liability companies (LLCs) taxed as partnerships, which result in a single level of tax at the shareholder or partner level. This treatment often was seen as preferable to a C corporation (C corp) structure, which involves two levels of tax. The C corp is subject to tax on profits at the corporate level, and shareholders are taxed on dividends received from those profits.

This perspective for family businesses contemplating a future sale has been changing and may continue to evolve. Why? First, the tax rate for C corps was reduced from 35% to 21% in 2018. Second, enhancements were made in 2010 and 2025 to th…