Which of the following facts would prevent an S Corporation election?
I.Magnificent Corporation has 125 shareholders.
II.Simms Corporation, incorporated in Kansas, has only one class of common stock issued and outstanding.

Question

Which of the following facts would prevent an S Corporation election?
I.Magnificent Corporation has 125 shareholders.
II.Simms Corporation, incorporated in Kansas, has only one class of common stock issued and outstanding.
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Quizplus · Accepted Answer

An S Corporation can have no more than 100 shareholders, and they must all be U.S. citizens or residents. Therefore, statement I is correct and would prevent an S Corporation election. Statement II is incorrect since having only one class of stock is a requirement for S Corporation status.

Which of the Following Facts Would Prevent an S Corporation