S CORPORATIONS

In 1982, Congress enacted the Subchapter S Revision Act. The act provided that small corporations if they meet certain requirements can be treated for tax purposes as S Corporations under Subchapter S of the Internal Revenue Code. Those electing for S Corporation status can avoid the imposition of income taxes at the corporate level while retaining many of the advantages of a corporation, particularly limited liability. Although the S Corporation has the advantages of the corporate form without the double taxation of income, it does have some disadvantages.

QUALIFICATIONS REQUIREMENTS FOR S CORPORATIONS STATUS

Certain requirements exist for a corporation to qualify for S Corporation status. Here are a few of the most important:

• The corporation must be a domestic corporation
• The Corporation must not be a member of an affiliated group of corporations
• The shareholders of the corporation must be individuals, estates, or certain trusts. Corporations, partnerships, and nonqualifying trusts cannot be shareholders
• The Corporation must have seventy-five or fewer shareholders
• The Corporation can have only one class of stock. Not all shareholders need have the same voting rights, however.
• No shareholder of the Corporation can be a nonresident alien

Partnership | Limited Liability Company | S Corporation

FOR FURTHER INFORMATION ON CORPORATIONS OR ANY BUSINESS MATTER PLEASE CALL JEFFREY S. POSIN & ASSOCIATES -- (702) 897-5870

WE'LL HELP YOU DETERMINE THE RIGHT STRUCTURE FOR YOUR BUSINESS!