Question

which of the following statements regarding the termination of an s corporation election is true? the election may be revoked by the internal revenue service if there is a history of 10 years of operating losses. the election may be revoked by the board of directors of the corporation only if they are not shareholders. the election terminates automatically if the corporation derives more than 25% of its gross receipts from passive investment income during the year. the election may be revoked with the consent of shareholders who, at the time the revocation is made, hold more than 50% of the number of issued and outstanding shares.

Answer 1

The correct statement is that the S Corporation election may be revoked with the consent of shareholders who hold more than 50% of the shares.

Step-by-step explanation:

The correct statement regarding the termination of an S Corporation election is that the election may be revoked with the consent of shareholders who, at the time the revocation is made, hold more than 50% of the number of issued and outstanding shares.

When a corporation elects to become an S Corporation, it must meet certain requirements to maintain its status. If the shareholders decide that they no longer want to be treated as an S Corporation, they can revoke the election by obtaining the consent of shareholders who collectively hold more than 50% of the issued and outstanding shares.

The other statements mentioned in the question are incorrect. The election cannot be revoked by the IRS based on operating losses, by the board of directors who are not shareholders, or if the corporation derives more than 25% of its gross receipts from passive investment income.