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Jason Is One of 100 Shareholders in Jace Corporation

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Jason is one of 100 shareholders in Jace Corporation.The remaining 99 shareholders are unrelated individual U.S.residents.During the year, Jason gave several of his shares in Jace Corp.to his brother as a birthday present and to his best friend, Hal (unrelated to all shareholders in Jace Corp.), as a wedding present.After these gifts, Jace Corp.has 102 shareholders.Is Jace Corp.prohibited from electing to become an S corporation? Explain.


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