Question

Which, if any, of the following can be eligible shareholders of an S corporation?

1) A nonqualifying trust
2) A Roth IRA
3) A non-U.S. corporation
4) Partnership
5) None of these choices can own stock

Answer 1

A Roth IRA can be an eligible shareholder of an S corporation.

Step-by-step explanation:

According to the characteristics of an S corporation, only certain types of shareholders are eligible to own stock. In the given choices, a Roth IRA can be an eligible shareholder of an S corporation. A Roth IRA is an individual retirement account in which contributions are made with after-tax dollars, and qualified distributions are tax-free.