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Gifting Stock to Charity
(Updated: 10/11/2016)

Electing S corporation tax status may be of interest to some small business owners. Which of the following is not true of an S corporation?

  1. It may have up to 500 shareholders.
  2. It is taxed as a pass-through entity, meaning that the owners report the business profits on their personal tax returns.
  3. Liability is limited to the shareholders’ contributions.
  4. It is allowed to issue only one class of stock.

Answer: A.

An S corporation may have no more than 100 shareholders. For detailed information about qualifying for this business structure, visit the IRS website.

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