In short
An S corporation election, made on Form 2553 with all shareholders' consent, lets an eligible domestic corporation pass its income, losses, deductions and credits through to its shareholders instead of paying corporate tax.
Key takeaways
- Eligibility: no more than 100 shareholders, only eligible shareholders (individuals, estates and certain trusts) and one class of stock.
- For it to apply to the current year, it generally must be filed by the 15th day of the third month of the year.
- Items are allocated pro rata by shares owned per day.
Where it's tested
REG: S Corporation Taxation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Which of the following would immediately terminate a corporation's S election?