Orlando Corporation, a calendar year taxpayer, has been an S corporation for several years. On July 9,

Question:

Orlando a calendar year taxpayer, has been an S for several years. On July 9, 2014, Orlando authorizes a second class of nonvoting preferred stock that pays a 10% annual dividend. The issues the stock to Sid on September 12, 2014, to raise additional equity capital. Sid owns no other Orlando stock.
a. Does Orlando's S election terminate? If so, when is the termination effective?
b. What tax returns must Orlando file for 2014? When are they due?
c. How would your answer to Parts a and b change if instead the second class of stock were nonvoting Class B common stock?
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...