Canary Corporation,a calendar year S corporation,issues some of its stock to a nonresident alien on March 4,2016.Canary becomes a C corporation as of March 5,2016.

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An S corporation cannot have a nonresident alien as a shareholder. Therefore, the scenario described is not possible. Additionally, a change in the corporation's tax status from S corporation to C corporation does not occur automatically and requires filing Form 8832 with the IRS.

Canary Corporation,a Calendar Year S Corporation,issues Some of Its Stock