ABC Corp Elected to Be Taxed as an S Corporation When

question 130

Essay

ABC Corp. elected to be taxed as an S Corporation when it was initially formed. During its first three years of existence, it reported passive investment income in excess of 25 percent of its gross receipts. Is ABC's S election terminated under the excess passive investment income test? If so, what is the effective date of the termination? If not, why not?

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Definitions:

Parental Genotypes

The genetic makeup of the parents that contributes to the genetic constitution of their offspring.

Fitness

Often related to physical health, referring to one's ability to perform a specific task or the biological concept of an individual's reproductive success.

Pollinator

An animal that facilitates plant reproduction by transferring pollen from one flower to another.

Reproductive Organ

An organ involved in the reproductive system that plays a role in the production of gametes and reproductive hormones.