An S corporation is different from a regular (or C) corporation only in that it elects to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code of the IRS. Congress created Subchapter S in the tax code in 1958 to promote entrepreneurship and small businesses. S corporations combine the benefits of partnerships (single taxation) with the limited liability offered by corporations. C corporations, on the other hand, allow for more flexibility in the number and type of shareholders, as well as different classes of stock.