I&#x27;m not sure if this is a valid comparison, but imagine that a group of doctors got together and founded a hospital, and decided that they would run the hospital as a co-op, where employees would buy into the co-op rather than receiving a normal salary.  However, as they grow they realize that they actually need some corporate guidance, so they find a management company.  The management company doesn&#x27;t want an ownership stake in the co-op, and the co-op doesn&#x27;t want to dilute it&#x27;s members, so instead they mutually agree to pay the management company a fixed X million dollars for it&#x27;s contracting services.  In the meantime, the co-op grows 10-fold, but the contract with the management company doesn&#x27;t change (somehow, let&#x27;s just assume the co-op doesn&#x27;t require active management, they just need guidance occasionally or something).  Now, someone looks at this and says, hey, if you had the normal management structure you&#x27;d be paying 10 times what you pay for your current management since they would take home y% of the profit and that would be taxed, but instead your co-op gets better tax treatment.<p>This would clearly be absurd, the management company is happy with their fee, and the co-op members are happy.  The fact that &quot;normal&quot; corporate structure would pay more in tax shouldn&#x27;t really factor into the decision since the question should be, given your corporate structure, are you paying taxes.