Neal Corporation was initially formed as a C corporation with a calendar year-end. Neal elected S corporation status, effective January 1, 2019. On December 31, 2018, Neal Corp. reported earnings and profits of $150,000. Beginning in 2019, Neal Corp. reported the following information. Does Neal Corp.'s S election terminate due to excess net passive income? If so, what is the effective date of the termination?

Question

Quizplus · Accepted Answer

The Answer of Neal Corporation was initially formed as a C corporation with a calendar year-end. Neal elected S corporation status, effective January 1, 2019. On December 31, 2018, Neal Corp. reported earnings and profits of $150,000. Beginning in 2019, Neal Corp. reported the following information. Does Neal Corp.'s S election terminate due to excess net passive income? If so, what is the effective date of the termination?

Neal Corporation Was Initially Formed as a C Corporation with a Calendar