Unformatted text preview: of the effected shareholders must elect to be taxed as an S corporation. An valid election made during the first 2½ months of the corporation’s tax year normally will take effect retroactive back to the first of the year. A valid election made after the first 2½ months of the corporation’s tax year will be effective on the first day of the following tax year.
CCH Essentials of Federal Income Taxation 9 of 14 Chapter 15 Automatic Termination of an S Election
S corporation status terminates automatically if one of the following events occurs during the year: • • The corporation fails to meet any of the The – requirements for being an S corporation. requirements A former C corporation that has accumulated former earnings and profits carried over from its years as a C corporation AND has passive investment income in excess of 25% of its gross receipts for three consecutive years.
CCH Essentials of Federal Income Taxation 10 of 14 Chapter 15 Voluntary Termination of an S Election
S corporation stat...
View Full Document
- Spring '10
- Corporation, S corporation