Shanghai Corporation was organized and elected S status in the current year. How much passive investment income can Shanghai earn and retain its S status?
A)none
B)80% of gross receipts
C)50% of gross receipts
D)no limit

Question

Quizplus · Accepted Answer

An S corporation can have passive investment income without a limit on the amount; however, if it has accumulated earnings and profits from a C corporation period and passive investment income exceeds 25% of gross receipts for three consecutive years, it can lose its S status.

Shanghai Corporation Was Organized and Elected S Status in the Current