Koch Industries is A C Corporation (Not An S Corporation)

For many years I have wondered if Koch Industries was established as a C Corporation or an S Corporation. At one time I believed they were an S Corporation due to this article discussing Bill Koch and his fight with Massachusetts when he reported a $275 million capital gain on his 1983 tax return (when he sold his Koch shares back to Charles and David Koch for $470 million) and placed the proceeds into S Corporations. Bill Koch would go on to start Oxbow Carbon LLC. Even the S Corporation organization links to an article in which a Forbes reporter believes Koch Industries is an S Corp. The most famous deceleration of this was back in 2010 when economic advisor Austan Goolsbee made the remark that Koch Industries didn't pay much in corporate income tax. The concern was Austan had access to confidential tax filings Koch Industries. However, it turns out Austan had the incorrect information and was referring to Bill Koch in an article he read from a Florida newspaper (see even economic advisors get the Koch brothers confused!).

Through searching business filings with the state of Kansas I came across filings that Koch Industries had filed with the state (going back to the original article of incorporation in 1940). Wood River Oil and Refining Company (predecessor to Koch Industries) back in 1940 (started by Fred Koch and partners) was funded with $15 million of capital and only had common stock of 16,000 shares. Then on July 20, 1959 Wood River Oil and Rock Island Oil and Refining merged together. After the merger the company had a total capital amount of $10 million. Charles Koch would grow the company year in and out by reinvesting 90% of the earnings back into the company. As the company grew all the number of common shares would grow but the company would also offer preferred stock as well. S Corporations are not able to have multiple classes of shares (preferred and common stock). Having different classes of stock would revoke the S Corporation and cause a large tax bill as well. C Corps are able to have multiple classes of shares. Since Koch industries offers different share classes (preferred and common) they would most likely be a C-Corp. 

The last report in 2004 breaks out the the preferred/common stock amounts. The company has 57,922,925.623 common non voting shares along with 276,524.2 voting shares which puts the total common shares at ~58.2 million shares. Koch Industries has authorized (or the capacity) to issue close to 133 million common shares. The company also has the capacity to issue 251,000 preferred shares as well (non-voting as well as cumulative voting shares as well). Charles and David Koch each own 42% of Koch Industries which would mean they would together own roughly 49 million common shares of Koch Industries.

This finally puts to rest the notion that Koch Industries is some type of pass through entity (LLC or S Corporation) to Charles and David Koch. Also remember that a C-Corp faces double taxation as well since the corporation is taxed first at the company level and then any dividends that are paid out are taxed to the shareholder. I do wonder though if Charles Koch started the company from scratch if he would still choose a C-Corp or want to set up Koch Industries LLC (as an S-Corp).