In: Accounting
1. Complete the following statements regarding the election of S corporation status.
A qualifying election requires the consent of (the majority/at least 80%/all) of the corporation's shareholders. The election is made on (Form 1120S/Form 1065/Form 2553). For S corporation status to apply in the current tax year, the election must be filed either (on the date of incorporation/in the previous year) or on or before the fifteenth day of the (first/third/fourth/sixth) month of the current year.
2. Complete the following statements regarding terminating an S election.
A voluntary revocation of the S election requires the consent of (all shareholders/shareholders owning a majority of taxes/at least 80% of shareholders) on the day the revocation is to be made. A revocation that designates a future effective date (results in the S corporation being treated as C corporation for the entire year/splits the corporation's tax year into a short S corporation year and a short C corporation year). If an S corporation fails to qualify as a small business corporation at any time after the election has become effective, its status as an S corporation ends (at the end of the tax year in which/on the day) the corporation ceases to be a small business corporation. If an S corporation has C corporation E & P and passive income in excess of (10% / 25% / 50%) of its gross receipts for three consecutive taxable years, the S election is terminated as of the beginning of the (fourth/fifth/tenth) year. Usually, after an S election has been terminated, the corporation must wait ____ years before reelecting S corporation status.
1.A qualifying election requires the consent of all of the corporation's shareholders. The election is made on Form 2553. For S corporation status to apply in the current tax year, the election must be filed either in the previous year or on or before the fifteenth day of the Third month of the current year.
2.Terminating an S election.
A voluntary revocation of the S election requires the consent of shareholders owning a majority of shares on the day the revocation is to be made. A revocation that designates a future effective date splits the corporation's tax year into a short S corporation year and a short C corporation year. If an S corporation fails to qualify as a small business corporation at any time after the election has become effective, its status as an S corporation ends on the day the corporation ceases to be a small business corporation. If an S corporation has C corporation E & P and passive income in excess of 25% of its gross receipts for three consecutive taxable years, the S election is terminated as of the beginning of the fourth year. Usually, after an S election has been terminated, the corporation must wait 5 years before reelecting S corporation status.