Question
What causes automatic termination of an S election?
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Answer
A disqualifying event, such as an ineligible shareholder or second class of stock.
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Question
Why is accumulated C-corp E&P important for S corporation distributions?
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Answer
It creates taxable dividend treatment before return of basis.
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Question
How are distributions treated when an S corporation has no accumulated C-corp E&P?
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Answer
Tax-free to stock basis, then capital gain.
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Question
Why do distributions reduce S corporation stock basis before losses do?
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Answer
Because basis is reduced for distributions before loss deductions under the ordering rules.
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