Which of the following entities is eligible to elect S Corporation status?

Answer options:

A partnership with two individual partners.

A C Corporation with one class of stock.

A Limited Liability Company (LLC) with one individual owner.

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

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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