Cassidy is a shareholder of an S Corporation, which currently has $100$ shareholders.

Cassidy is getting married and plans on giving his new spouse some of his S Corporation stock.

He asks you whether doing would violate the $100-$shareholder rule, and consequently terminate

the company$$s S Corporation status. What do you tell him?

a$.$ Yes, because there will now be $101$ shareholders according to IRC $1361($c$)(1)($A$)($i$).$

b$.$ No$,$ because there will still be $100$ shareholders according to IRC $1361($c$)(1)($A$)($i$).$

c$.$ No$,$ because S Corporations are allowed to have $150$ shareholders.