What does small business corporation mean on the CPA exam?
Small business corporation. The eligibility test for an S election: a domestic corporation, not an ineligible corporation, with no more than 100 shareholders, no shareholder other than an individual, estate, qualifying trust, or qualifying exempt organization, no nonresident alien shareholder, and one class of stock.
Defined against Sec. 1361(b)(1).
Which CPA exam sections use small business corporation?
Small business corporation appears in the REG section of the CPA exam.
Related terms
- C corporation: A corporation taxed in its own right under subchapter C.
- straight debt: A written unconditional promise to pay a sum certain whose interest is not contingent on profits, which is not convertible into stock, and whose creditor is an individual other than a nonresident alien, an estate, qualifying trust, or regular lender.
- S corporation: A corporation that elects to be taxed like a partnership, so profit is taxed once in the shareholders' hands.
- nonresident alien: An individual who is neither a United States citizen nor a resident under the green card or substantial presence tests.
- debt basis: An S corporation shareholder's basis in loans they personally made to the corporation.
- stock basis: A shareholder's investment in S corporation stock for tax purposes.