S Corporations Part 1 - Requirements Explained | Form 2553, Shareholder Limits & Termination Rules

What does it actually take to qualify as an S Corporation, and how do you make or terminate an S Corp election with the IRS? In Part 1 of the S Corporation Tax Bootcamp series, we break down the fundamental eligibility requirements for S Corporations, how shareholder limits work, and the exact timing to file Form 2553. 📌 What You’ll Learn in This Video: • Core S Corp Requirements: Understand the key rules—domestic corporation status, human shareholder restrictions, and the single class of stock requirement. • The 100 Shareholder Limit Myth: How family attribution rules (spouses, children, and linear descendants) can expand the total allowable owners far beyond 100. • Eligible Owners vs. Ineligible Entities: Why partnerships, C corporations, and non-resident aliens cannot own S Corp shares (and which trusts or QSubs qualify). • Filing Form 2553: Step-by-step timeline for electing S Corp status within the first 2 months and 15 days for retroactive tax treatment. • Terminating S Corp Status: How to revoke an election, unintentional violations, and the 3-year excess passive income rule. ⏱️️ TIMESTAMPS 00:00 - Introduction & Part 1 Overview 00:55 - Requirement 1: Domestic Corporation Rules 01:21 - Requirement 2: The 100 Shareholder Limit & Family Rules 02:22 - Requirement 3: Eligible Shareholders (Humans vs. Entities) 03:01 - Requirement 4: Citizenship & Residency Requirements 03:24 - Requirement 5: One Class of Stock Rule 04:02 - Exception: Qualified Subchapter S Subsidiaries (QSubs) & Form 8869 04:28 - How & When to File Form 2553 (Deadlines & Retroactive Dates) 05:57 - How to Terminate or Revoke S Corp Status 07:26 - Involuntary Termination & Excess Passive Income Rules