CCH Federal Taxation Comprehensive Topics 8 of 63 Chapter 21, Exhibit 2a
CCH Federal Taxation Comprehensive Topics 9 of 63 Chapter 21, Exhibit 2b
CCH Federal Taxation Comprehensive Topics 10 of 63 Chapter 21, Exhibit 2c
Nontax Matters. For most structural matters (e.g., formation, redemptions and terminations), S corporations are treated in much the same manner as C corporations. CCH Federal Taxation Comprehensive Topics 11 of 63 Chapter 21, Exhibit 2d
A corporation is treated as an S corporation only for those days for which each specific eligibility requirement is met and the required election is effective. Eligibility and election rules include:Unanimous Consent. 100% of the shareholders must consent to the S election.Deadline For Filing S Election. If a calendar year C corporation makes an S election by 3/15/x1, it is retroactive to 1/1/x1. If made after 3/15/x1, but before 3/15/x2, it is effective 1/1/x2. CCH Federal Taxation Comprehensive Topics 12 of 63 Chapter 21, Exhibit 3a
One Class of Stock. Only one class of stock is permitted. Rights to profits and assets on liquidation must be identical. Debt may be treated as a disqualifying second class of stock. Maximum 100 Shareholders. The number of shareholders may not exceed 100. A nonresident alien may not own shares. Each shareholder must be an individual, an estate, or a qualified trust. Related taxpayers count as one taxpayer. CCH Federal Taxation Comprehensive Topics 13 of 63 Chapter 21, Exhibit 3b
Ineligible Corporations. The corporation must be domestic but not a bank or insurance company. Eligible Subsidiaries. S corporations can own C corporations, but C corporations cannot own S corporations. S corporations can own qualified subchapter S subsidiaries (QSub). A QSub is an electing domestic corporation that qualifies
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