Asked by Turner Beard on Apr 25, 2024
Verified
Which of the following is true about an S corporation?
A) It is taxed at both the corporate and shareholder levels.
B) It may only have 500 or fewer shareholders.
C) An S corporation election requires the consent of a majority of its shareholders.
D) Shareholders of an S corporation may be only individuals or trusts.
S Corporation Election
A tax election made by small business corporations with 100 shareholders or less to be taxed as a pass-through entity, avoiding double taxation on corporate income.
Shareholders
Individuals or entities that own one or more shares of stock in a public or private corporation, thus having a financial interest in the company's performance.
- Identify the regulatory variances among for-profit, not-for-profit, and S corporations.
- Determine the tax consequences for various categories of corporations.
Verified Answer
MF
maroun farah5 days ago
Final Answer :
D
Explanation :
An S corporation is a special type of close corporation.An S corporation's profits are taxed only once-at the shareholder level,eliminating the double-taxation penalty of incorporation.All shareholders must consent to an S corporation election.The Internal Revenue Code requires an S corporation to have only one class of shares and 100 or fewer shareholders.Shareholders may be only individuals or trusts.
Learning Objectives
- Identify the regulatory variances among for-profit, not-for-profit, and S corporations.
- Determine the tax consequences for various categories of corporations.
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