ExpertHard1 markMultiple Choice
CPA · Question 30 · Area V: Entity Taxation
Which of the following entities is eligible to elect S Corporation status?
Which of the following entities is eligible to elect S Corporation status?
Answer options:
A.
A partnership with two individual partners.
B.
A C Corporation with one class of stock.
C.
A Limited Liability Company (LLC) with one individual owner.
D.
A corporation with a nonresident alien shareholder.
How to approach this question
S Corp Eligibility: Domestic Corp (or LLC electing Corp), Max 100 shareholders, Shareholders must be Individuals (US Citizens/Residents), Estates, or Certain Trusts. No Corps/Partnerships/NRAs as shareholders.
Full Answer
C.A Limited Liability Company (LLC) with one individual owner.✓ Correct
C
An LLC is an eligible entity to elect S Corporation status (by filing Form 2553, which deems the check-the-box election to be a corporation). Partnerships, C Corporations, and Nonresident Aliens are ineligible shareholders.
Common mistakes
Thinking an LLC cannot be an S Corp (it can if it elects).
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