Question

Acorporation can make an S corporation electio if which of the followingstatements is true A) It...

Acorporation can make an S corporation electio if which of the followingstatements is true

A) It has 200 shareholders (100 family members)

B) It has a partnershi as a shareholder

C) It has two calsses of stack issued and ooutstanding

D) It is foreign corporation

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Answer #1

Option C is incorrect because it should have only one class of stock outstanding.

Option B is also incorrect because partnership as a shareholder will terminate the S election.

Correct asnwer will be option A since election can be held since there are 100 family member out of 200 shareholders. Family members are consider as a one shareholder. So if each shareholder has family member with him/her then count will reduce to 100, which make S corporation eligible for election.

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