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Which of the following is a requirement for a small business corporation to elect S corporation status?
Suggested Answer: A
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Choice 'a' is correct. A corporation may elect to be taxed like a partnership under Subchapter S only if it has only one class of stock.
Choice 'b' is incorrect. A corporation can elect S corporation status only if its shareholders are individuals, estates, or certain types of trusts.
Choice 'c' is incorrect. Foreign shareholders generally are prohibited in an S corporation.
Choice 'd' is incorrect. An S corporation can have up to 100 shareholders, but it may have fewer.
12 comments · newest first
MA
Madalyn
3 months ago
Definitely A. It simplifies ownership structure.
HA
Hannah
3 months ago
Yeah, that makes sense. S corps need that for tax reasons.
FA
Fannie
3 months ago
I think it's A) It has only one class of stock.
JE
Jesusita
3 months ago
Surprised that it's only one class of stock!
KE
Kenny
3 months ago
Definitely not B or C, those are wrong.
ST
Stephania
4 months ago
Wait, what? I thought partnerships could be shareholders!
AN
Annmarie
5 months ago
Totally agree with that!
DA
Daron
5 months ago
A) It has only one class of stock.
AN
An
6 months ago
I’m pretty sure that having at least one partnership as a shareholder is not a requirement either. S corporations are usually limited to individuals, right?
BO
Bobbye
6 months ago
I feel like international ownership is definitely not a requirement for S corp status. It seems like it would complicate things too much.
MA
Margarita
6 months ago
I remember practicing a question similar to this, and I think it was about the number of shareholders. I know S corporations have a limit, but I can't recall the exact number.
OL
Oliva
6 months ago
I think the requirement about having only one class of stock is correct, but I'm not entirely sure if that's the only one.