2. An S election is terminated if the S corporation has passive investment income in excess of 20 percent of gross receipts for three consecutive years.

True or False

1. Differences in voting powers are permissible across shares of S corporation stock as long as the shares have identical distribution and liquidation rights.

True or False

3. S corporations are not entitled to a dividends received deduction.

True or False

4. S corporations have considerable flexibility in making special profit and loss allocations of operating income.

True or False

5. To make an S election effective as of the beginning of the current year, an S corporation must file IRS Form 2553 within three and a half months after the beginning of the year.

True or False

6. If an S corporation shareholder sells her stock to a nonresident alien, it will automatically terminate the S election.

True or False

7. SoTired, Inc., a C corporation with a June 30 year-end, elects S corporation status this year. Assuming no special elections, SoTired, Inc., will continue to use a June 30 year-end as an S corporation.

True or False