An S corporation has 300 shares of outstanding stock.K owns 250 shares and U owns 50 shares.On June 30 of this year, K sells 200 of his shares to M.M may cause revocation of the S corporation election.

Question

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An S corporation can have a maximum of 100 shareholders. If M is an ineligible shareholder or if the total number of shareholders exceeds 100, it could cause the S corporation election to be revoked.

An S Corporation Has 300 Shares of Outstanding Stock