It is imperative to know who are you issuing shares to when you are an S-Corp. Inadvertently issuing shares to the wrong person or entity may revoke and terminate your S-corp status automatically. If this is not planned it may throw an unintentional wrench into your tax filing.
This article is a detailed resource on S-corp shareholders. Continue reading to find out more about who can and cannot be a shareholder, plus other limitations, of an S-corp.
Eligible shareholders include
Ineligible shareholders include
In addition to who can and cannot be a shareholder, S-corporation stock comes with other limitations, as follows:
What Can an S-Corp Own?
Partnerships cannot be an S-corp shareholder but an S-corp may own an interest in a partnership. Similarly, while a C-corp can't own shares in an S-corp, an S-corp can own shares in a C-corp.
As always, we recommend you consult Hoppe Tax with your particular situation before making any final decisions.
CPA + Partner at Why Blu