An S Corporation has passive investment income (PII) exceeding 25% of gross receipts and has accumulated E&P from C Corp years. If this condition continues for three consecutive years, what happens?

1. Identify Sting Tax Conditions: S Corp + AE&P + Excess Passive Income.<br/>2. Consequence 1: Tax on excess net passive income (Year 1-3).<br/>3. Consequence 2: If condition persists for 3 consecutive years, S election terminates.<br/>4. Result: Termination.