Question

In determining if an S corporation has no more than 100 shareholders, which of the following statements is true?

	A.	Estates are not treated as a shareholder.
	B.	Family members in up to six generations are treated as a single shareholder.
	C.	Husbands and wives are treated as separate shareholders.
	D.	Stock held by an agent is treated as being owned by the agent.

Answer 1

As per the provisions relating to an S corporation,
An S corporation can have a maximum of 100 shareholders. But an important feature in calculating this shareholder limit is that shares owned by members of a single family are deemed to be owned by a single shareholder.
But the only restriction is that the one shareholder benefit is given upto 6 generations.

Hence, the correct answer is B). Family members in up to six generations are treated as a single shareholder.