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AICPA CPA-Business Exam - Topic 2 Question 123 Discussion

Which of the following is a requirement for a small business corporation to elect S corporation status?
A) It has only one class of stock.
B) It has at least one partnership as a shareholder.
C) It has international ownership.
D) It has more than 75 shareholders.

AICPA CPA-Business Exam - Topic 2 Question 123 Discussion

Actual exam question for AICPA's CPA-Business exam
Question #: 123
Topic #: 2
[All CPA-Business Questions]

Which of the following is a requirement for a small business corporation to elect S corporation status?

Show Suggested Answer Hide Answer
Suggested Answer: A

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.


by Maybelle at Apr 04, 2026, 07:07 AM

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Fannie
I think it's A) It has only one class of stock.
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Jesusita
5 days ago
Surprised that it's only one class of stock!
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Kenny
10 days ago
Definitely not B or C, those are wrong.
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Stephania
15 days ago
Wait, what? I thought partnerships could be shareholders!
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Annmarie
2 months ago
Totally agree with that!
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Daron
2 months ago
A) It has only one class of stock.
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An
3 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?
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Bobbye
3 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.
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Margarita
3 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.
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Oliva
3 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.
upvoted 0 times
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