Business / What Are The Eligibility Requirements That A Corporation Must Meet In Order To Qualify Under Subchapter S?

What Are The Eligibility Requirements That A Corporation Must Meet In Order To Qualify Under Subchapter S?

Autor:  edrush87  05 December 2011
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Words: 494   |   Pages: 2
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2. What are the eligibility requirements that a corporation must meet in order to qualify under Subchapter S?

Under IRS regulations, the S Corporation must:

-Be a domestic corporation;

- Have no more than 100 shareholders;

- The S Corporation must include only eligible shareholders in the election;

- The entity must have only one class of stock;

- The business must not be an ineligible corporation.

13. What limits are placed on the selection of a tax year of an S corporation? How do these limits differ from those applicable to C corporations and partnerships?

S corps is bound to the regular rules for a tax year which is either a calendar year or a fiscal year. However, they are limited to the tax year which is required to be either a year ending on December 31 or other tax year that the corporation established as business. On the other hand, C corps is allowed to select any fiscal year, and Partnership has additional option to choose the tax year of its majority partners on top of the options the S corps have.

26. Durrabusiness is organized as a regular C corporation in 1986. At the beginning of the present year, Durrabusiness elects to be an S corporation. Will the election cause a recapture of the general business investment credit taken on any property purchased while a C corporation?

The election as an S Corporation will not cause a recapture of the general business investment credit taken on property purchased while the status was a C Corp because the S Corp. election does not dispose of the assets purchased when a C Corp that lead to investment credit recapture.

53. Several individuals form Lang Corporation on May 1, 2011. The corporation begins acquiring assets on June 1, 2011, and begins business on August 1, 2011. What is the latest date that Lang can file Form 2553 requesting S corporation status?

A corporation must file their 2553 to request S Corporation status no more than two months and 15 days after the beginning of the tax year that the e...



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