Suppose Hassell formed a C corporation, NewCorp., Inc., in 2016 with a calendar tax year and filed a form 2553 to elect S corporation status on April 14, 2016 with the consent of all of NewCorp., Inc.'s, shareholders: Hassell, Richie Cunningham, and Arnold's, Inc. (a C corporation). When is the S election effective?
A) January 1, 2016.
B) April 14, 2016.
C) January 1, 2017.
D)April 14, 2017.
E)Never.

Question

Quizplus · Accepted Answer

A C corporation cannot be an S corporation shareholder. Since Arnold's, Inc. is a C corporation, the S election is invalid.

Suppose Hassell Formed a C Corporation, NewCorp