S Corporations | Internal Revenue Service

S corporations are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.

To qualify for S corporation status, the corporation must meet the following requirements:

• Be a domestic corporation
• Have only allowable shareholders
  • May be individuals, certain trusts, and estates and
  • May not be partnerships, corporations or non-resident alien shareholders
• Have no more than 100 shareholders
• Have only one class of stock
• Not be an ineligible corporation (i.e. certain financial institutions, insurance companies, and domestic international sales corporations).

In order to become an S corporation, the corporation must submit Form 2553, Election by a Small Business Corporation signed by all the shareholders. See the Instructions for Form 2553PDF for all required information and to determine where to file the form.

Filing Requirements:

Chart 2 – S Corporation Shareholders

If you are an S corporation shareholder then you may be liable for…

Use Form…

Separate Instructions…

Income Tax
1040 or 1040-SR and Schedule E and other forms referenced on the shareholder’s Schedule K-1
Instructions for Schedule E (Form 1040 and 1040-SR) Supplemental Income and Loss

PDF

Estimated tax
1040-ES