Question

 Maria, a resident of Mexico City, Mexico, formed MZE Corp. in Mexico under Mexican law but planned to do business in the United States. Is MZE eligible to elect S corporation status in the United States? Explain.

Answer 1

No, MZE Corp. is not eligible to elect S corporation status in the United States. S corporations are formed under state or federal law in the United States. 

To be eligible to elect S corporation status, a corporation must be a domestic corporation as defined in section 7701(a)(4) of the Internal Revenue Code. 

A domestic corporation is a corporation that was created or organized in the United States or under the laws of the United States, any state, the District of Columbia, the possessions of the United States, or any territory or insular possession subject to the jurisdiction of the United States. 

 

 

Therefore, because MZE Corp. was created in Mexico, it is not eligible to elect S corporation status in the United States.