The default taxation status for a Corporation is a C-Corporation. A C-Corporation files form 1120 with the IRS and pays its own taxes on its profit after deducting expenses including salaries and contractural payments to independant contractors. In making such payments many C-Corporations effectivly "Zero Out" their income Tax Liability.

Other C-Corporations choose to "retain" earnings and pay some Corporate Taxes, often at lower rates than the individual stockholders would pay if all the income were distributed.