Shareholders of an S Corporation want to revoke the S election. Shareholder A owns 40%, Shareholder B owns 20%, and Shareholder C owns 40%. Who must consent to the revocation?

Answer options:

All shareholders (100%)

Any shareholder.

Shareholders owning more than 50% of shares.

Shareholders owning 66 2/3% of shares.

How to approach this question

Revocation requires consent of > 50% of shares.

Full Answer

C.Shareholders owning more than 50% of shares.✓ Correct

IRC §1362(d)(1)(B). An election may be revoked only if shareholders holding more than one-half of the shares of stock of the corporation on the day on which the revocation is made consent to the revocation.

Common mistakes

Thinking unanimity is required.

Question 53 All questions Question 55

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