An S election is terminated if the S corporation has passive investment income in excess of 20 percent of gross receipts for three consecutive years.
The amount is 25 percent of gross receipts for three consecutive years.

Question

Quizplus · Accepted Answer

An S election is terminated if the S corporation has passive investment income in excess of 25 percent of gross receipts for three consecutive years, not 20 percent.

An S Election Is Terminated If the S Corporation Has