If an S corporation shareholder sells her stock to a nonresident alien, it will automatically terminate the S election.

Name: If an S corporation shareholder sells her stock to a nonresident alien, it will automatically terminate the S election.
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According to IRS rules, if an S corporation shareholder sells her stock to a nonresident alien, it will automatically terminate the S election. This is because nonresident aliens are not allowed to hold shares in S corporations.

If an S Corporation Shareholder Sells Her Stock to a Nonresident