Which of the following statements is true of an S corporation?
A) It cannot have more than 100 shareholders.
B) It is the official designation for a corporation with less than 500 employees.
C) It is the least expensive form of organization to create.
D) It does not have shareholders.
E) It need not file an information return with the Internal Revenue Services since it does not pay any taxes.

Question

Quizplus · Accepted Answer

S corporations cannot have more than 100 shareholders, each of whom must elect to have the corporate income allocated to the shareholders annually in computing their income for tax purposes, whether actually paid out or not. Only individuals are eligible to elect under Subchapter S.

Which of the Following Statements Is True of an S