Question

What statement is correct with respect to an S corporation?

1) A voting trust arrangement is not available.
2) There is no advantage to elect § 1244 stock.
3) An S corporation can own up to 85
4) A resident alien may be a shareholder.
5) None of these statements are true.

Answer 1

A resident alien can be a shareholder of an S corporation. Other statements about voting trust arrangements and benefits of § 1244 stock are incorrect, and S corporations are limited to 100 shareholders.

Step-by-step explanation:

The correct statement with respect to an S corporation is that a resident alien may be a shareholder. Incorrect assertions include that a voting trust arrangement is unavailable, as S corporations can indeed utilize voting trusts. Furthermore, electing § 1244 stock does provide advantages, such as allowing shareholders to claim ordinary loss deductions on dispositions of stock.

Additionally, an S corporation cannot own up to 85, they are limited to 100 shareholders. Therefore, among the options presented, the presence of resident aliens as shareholders is correct for S corporations.