B. Whether all the shareholders must consent to the election of S status, under section 1362(a)(2)?
C. Whether the election of S status is effective if a C corporation does not meet all the requirements in the election year, under Reg §1.1362-6(2)(ii)(B)?
D. Whether an S corporation can keep its C corporation tax year, which ends in June 30, without documenting any business purpose, under the provision of section 1378(b)?
E. Whether a newly …show more content…
All shareholders of a small business corporation must have unanimous consent to the election of an S corporation status, prescribed by section 1362(a)(2), or else the election is not valid.
If a corporation elects an S status at any time in the preceding year or within 2½ months of the taxable year it is in, it become an S corporation as of the current taxable year, under section 1362(b)(1). However, if a corporation is not a small business corporation for the entire year before the election date, or if any shareholder who has stocks before the election date that does not consent to the election of S status, Reg §1.1362-6(2)(ii)(B) states that the corporation will only become an S corporation for the following taxable year.
Under section 1378(b), an S corporation must adopt a calendar year-end, unless it can establish a business purpose for using a fiscal year-end. Furthermore, in order to retain the fiscal year it is using, an electing S corporation shall obtain the approval from the Commissioner, prescribed by Reg §1.1378-1(d).
According to section 1363(d)(1), if an S corporation was a C corporation before and it used LIFO method to