Question

Dart Corp., a calendar-year S corporation, had 60,000 shares of voting common stock and 40,000 shares of nonvoting common stock issued and outstanding. On February 23, 2014, Dart filed a revocation statement with the consent of shareholders holding 30,000 shares of its voting common stock and 5,000 shares of its nonvoting common stock. Dart’s S corporation electionA Terminated as of January 1, 2015.B Did not terminate.C Terminated as of January 1, 2014.D Terminated on February 24, 2014.

Answer 1

Answer:

The answer is: B) Did not terminate.

Explanation:

S corporations (small business corporation) are corporations that choose to pass corporate income, losses, deductions, and credits through to their shareholders for taxation purposes.

In order for an S Corporation to terminate, stockholders owning more than 50% of the corporation's stock must file a revocation statement.

Dart Corp has 100,000 common stocks outstanding, so to file a revocation statement, stockholders owning at least 50,001 stocks must approve it. In this case only stockholders owning 35,000 stocks approved the revocation statement.