Maria resides in San Antonio, Texas. She formed MZE Corporation under the state laws

Maria resides in San Antonio, Texas. She formed MZE Corporation under the state laws of Texas. Maria anticipates that she will conduct her business activities in both Mexico and the United States. Is MZE eligible to elect S corporation status? Explain.

Expert Solution

No, MZE Corporation is not eligible to elect S corporation status.

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 Corporation was created in Texas, it is not eligible to elect S corporation status.

Nabeel answered 2 years ago

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