- 6 -
years. See id. The Code provides only these three ways by which
the S corporation election may be terminated. See sec. 1362(d).
Petitioner makes no claim that either the first or third method
of termination applies. Thus, we must determine whether the
filing of the chapter 11 bankruptcy petition terminates V&M
Management’s status as a “small business corporation”. Section
1361(b) provides in part:
SEC. 1361(b). Small Business Corporation.--
(1) In general.–-For purposes of this subchapter,
the term “small business corporation” means a domestic
corporation which is not an ineligible corporation and
which does not–-
(A) have more than 75 shareholders,
(B) have as a shareholder a person (other
than an estate and other than a trust described in
subsection (c)(2)) who is not an individual,
(C) have a nonresident alien as a
shareholder, and
(D) have more than 1 class of stock.
Section 1361(b)(2) describes an “ineligible corporation” as:
any corporation which is–-
(A) a financial institution which uses the
reserve method of accounting for bad debts
described in section 585,
(B) an insurance company subject to tax under
subchapter L,
(C) a corporation to which an election under
section 936 applies, or
(D) a DISC or former DISC.
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Last modified: May 25, 2011