A
corporation can elect Subchapter S corporation status by filing Form 2553, Election
by a Small Business Corporation.
The Subchapter S corporation must meet the following
requirements:
• All shareholders must consent to
Subchapter S corporation status.
• Limited to 75 shareholders.
• Subchapter S corporations can have only one class of stock.
• Must be a domestic corporation. Shareholders must be citizens or
residents of the United States.
• Subchapter S corporation must use a permitted tax year, or elect to use a tax year
other than a permitted tax year.
• Only individuals, estates, certain trusts, and certain charities may
be Subchapter S corporation shareholders.
Ineligible Shareholders Include: Corporations,
partnerships (unless the stock is held as a nominee for an individual
treated as the shareholder), and IRAs.
