Although the SCOS rules appear clear (i.e., simply ensure that the S corporation's articles of incorporation authorize only one class of stock), there are several traps that could give rise to a prohibited second class of stock and
terminate S status.
First, if it does not eliminate the AEP, and has excess passive investment income (PII) (i.e., more than 25% of gross receipts) for three consecutive years, its S status will
terminate in the fourth year.
CD is the continuing/ resulting partnership; thus, AB
terminates. The proposed regulations do not address A's and B's capital account balances in CD after the merger and the land's Sec.
If a QSST election is not made, the S election technically
terminates, because the trust is an ineligible shareholder.
If the asset that S sells to B is a partnership interest and the partnership remains in existence (i.e., another partner owns an interest in the partnership, so that the partnership does not
terminate under Sec.
On admission of another shareholder to the QSub, the QSub election
terminates; the QSub becomes a C corporation.
The LLC
terminates for tax purposes, resulting in gain or loss on the sale of their LLC interests to the selling members under Sec.
On November 30, 2015, Tongda Venture reported it did not obtain the approval of the China Securities Regulatory Commission for the non-public offering within the validity period of its shareholders' approval, and therefore decided to
terminate its non-public offering related to the restructuring.
A Contractor who
terminates on account of the Employer's breach is typically entitled to immediate payment of sums due to it under the contract, together with out of pocket expenses (including its demobilisation costs) and interest.
A corporation's S election
terminates effective on the date that the company commits the act that triggers the ineligibility.
The adjustment will be accelerated when a taxpayer ceases to engage in the trade or business or
terminates its existence.
Northwest's pilots say they will strike if the airline
terminates the contract.
