S Corporation Taxation

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≤100 shareholders; individuals/estates/certain trusts only; no NRAs, no corporate/partnership shareholders; one class of stock
Election requires unanimous consent; violation terminates immediately (5-year wait to re-elect)
Basis order: income ↑ → distributions ↓ → nondeductibles ↓ → losses ↓ (suspended if basis exhausted)
S corp basis includes direct shareholder loans, NOT a share of entity debt (unlike partnerships)
With accumulated E&P: AAA → E&P (dividend) → basis → capital gain
S corp income is not self-employment income; reasonable wages required