Which of the following will render a corporation ineligible for S corporation status?
I.The corporation has 125 stockholders.
II.One of the stockholders is another corporation.

Question

Which of the following will render a corporation ineligible for S corporation status?
I.The corporation has 125 stockholders.
II.One of the stockholders is another corporation.
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Quizplus · Accepted Answer

Both statements are correct. According to the IRS, S corporations can have no more than 100 shareholders, and they must all be individuals, estates, or certain trusts. Additionally, another corporation cannot be a shareholder in an S corporation. Therefore, a corporation with 125 stockholders and one of them being another corporation would be ineligible for S corporation status.

Which of the Following Will Render a Corporation Ineligible for S