Background: An S corporation operates as a pass-through entity in much the same manner as a partnership. Items of income and deduction are passed through to the individual shareholders for tax purposes. Thus, the owners receive the protection from personal liability afforded to corporations, but avoid the “double taxation” pitfall of regular C corporations. This has made S corporations a popular entity for many business operations.
The election to be treated as an S corporation requires the irrevocable consent of every shareholder. Keep in mind:
If a husband and wife have a community interest in the stock, both spouses must consent to the election.
Consent of a minor may be given by a legal representative or a nat…