If an S Corporation Has C Corporation E & P

question 1

Short Answer

If an S corporation has C corporation E & P and passive investment income in excess of
% of its gross receipts for consecutive taxable years, the S election is terminated at the beginning of the year.

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Definitions:

Facility Expenses

Costs associated with maintaining and operating a physical location or building, such as rent, utilities, and maintenance.

Spending Variance

The difference between the actual amount spent and the budgeted amount for a specific period or category.

Travel Expenses

Costs associated with traveling for the purpose of conducting business-related activities, including transportation, lodging, and meals.

Spending Variance

The difference between the actual amount spent and the budgeted or standard amount expected to be spent.