Final answer:
A nonresident alien and a partnership cannot be eligible shareholders of an S corporation, but a three-person LLC and the estate of a deceased shareholder can be eligible shareholders.
Step-by-step explanation:
An S corporation is a type of corporation that provides certain tax advantages to its shareholders. The eligibility of shareholders for an S corporation is restricted. To be an eligible shareholder of an S corporation, the individual must be a U.S. citizen or resident alien. Therefore, a nonresident alien would not be an eligible shareholder of an S corporation.
Additionally, a partnership would not be an eligible shareholder of an S corporation. A partnership is a business structure where two or more individuals come together to form and operate a business for profit. Since an S corporation is a separate legal entity, it cannot be a partner in a partnership.
However, both a three-person LLC and the estate of a deceased shareholder can be eligible shareholders of an S corporation. A limited liability company (LLC) is a flexible business structure that combines the pass-through taxation of a partnership with the limited liability protection of a corporation. As long as the LLC meets the requirements to be an S corporation, it can hold shares in an S corporation. Similarly, the estate of a deceased shareholder can continue to hold shares in an S corporation.
In summary, the eligible shareholders of an S corporation include U.S. citizens, resident aliens, three-person LLCs, and the estate of a deceased shareholder. A nonresident alien and a partnership cannot be eligible shareholders of an S corporation.