Mary, a U.S. citizen, owned 25% of the stock of Floran Corporation, an electing S corporation. At the time of her death, the Floran stock may go to all the following without affecting the S election except
A)her estate.
B)a testamentary trust.
C)a small business trust.
D)a charitable remainder unitrust.

Question

Quizplus · Accepted Answer

A charitable remainder unitrust is not an eligible shareholder for an electing S corporation, as it is a tax-exempt organization. Therefore, if Mary's Floran stock goes to a charitable remainder unitrust, it would cause the S election to be terminated. Mary's estate, a testamentary trust, and a small business trust are all eligible shareholders for an electing S corporation, and the S election would remain in effect if the stock goes to any of these entities.

Mary, a US