What Are the Eligibility Requirements That a Corporation Must Meet in Order to Qualify Under Subchapter S?
Autor: edrush87 • December 5, 2011 • Essay • 494 Words (2 Pages) • 1,127 Views
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