Question: What are the Eligibility Requirements for Electing S Corporation Status?

An S corporation is a corporation in which the taxes pass through to the owners. S corporations are formed by first incorporating a business in a state, then electing S corp status with the IRS. Only certain types of corporations may elect S corporation status.

Answer:

Eligibility Requirements for S Corporation Status
To qualify for S corporation status, the corporation must meet the following requirements:

• Be a domestic corporation (that is, it must be formed within a state of the U.S.
  
• Shareholders are limited to individuals, certain trust and estates
  
• Shareholders may not include partnerships, corporations, or non-resident aliens

The corporation may have no more than 100 shareholders

The corporation may have no more than one class of stock

The corporation may not be ineligible for other reasons, that is certain financial institutions, insurance companies, and domestic international sales corporations.
In addition, the corporation must agree to a calendar year fiscal (financial year) to correspond with the tax year for individual tax returns (there are exceptions to this requirement).

To elect S corporation status, Form 2553 must be filed with the IRS no later than two and a half months into the company's fiscal year. Read more about how to file an S corp election.
http://biztaxlaw.D106/od/corporations/tp/allaboutscorp.htm