This course will discuss S corporation taxation, shareholder requirements, and estates and trusts as shareholders.

1. Subchapter S Corporations
& Estates/Trusts as
Shareholders
Presented by
Joe Lancaster, CPA

2. I.S Corporation Taxation
II. Who May Be a Shareholder in an S
Corporation (IRC Section 1361)
A. Individuals
B. Estates & Certain Trusts
C. Certain Exempt Organizations (Mainly
ESOP’s)

3. III. Estates & Certain Trusts as
Shareholders
A. Estates
1. No “Bright Line” Time Limit, But
Cannot Be Indefinite
B. Grantor Trusts
1. Grantor Must Be an Eligible
Shareholder
2. Only One Grantor (Spouses Can
Count as One)
3. Many Rulings

4. III. Estates & Certain Trusts as
Shareholders
C. Certain Testamentary Trusts (Two-
Year Rule – Was 60 Days Before
1997)
D. Voting Trusts
E. Qualified Subchapter S Trusts
(QSST’s)
F. Electing Small Business Trusts
(ESBT’s)

5. IV. Qualified Subchapter S Trusts
(QSST’s) (IRC Section 1361(d))
A. Only One Income Beneficiary (Current
Lifetime)
B. Corpus Distributions Only to That
Beneficiary
C. Income Interest Terminates on Earlier
of Trust Termination or
Beneficiary’s Death
D. If Trust Terminates During Beneficiary’s
Life, All Assets Go to Beneficiary
E. All Income Distributed or Required to
be Distributed
F. Beneficiary Makes Election
G. Treated as Grantor Trust With respect
to the S Corporation Stock

6. V. Electing Small Business Trusts
(ESBT’s) (IRC Section 1361(e))
A. Specified Trust Beneficiaries
B. No Interest in Trust Acquired
by Purchase
C. Trustee Makes Election
D. Part of Trust Consisting of S
Corporation Stock is a
Separate Trust
E. Taxed at Maximum Rate (IRC
Section 641(c))

7. VI. Relief for Late QSST & ESBT
Elections
A. IRC § 1362(f) &
Revenue Procedure 2013-30
1. All Eligible Requirements Met
2. All Entities Filed Returns Consistent
With S Status
3. Relief Requested Within 3 Years &
75 Days of Effective Date
B. Flow Chart (next slide)

8. VI. Relief for Late QSST & ESBT
Elections

9. If you have any questions
please feel free to contact
Joe at:
214-635-2563
jlancaster@gppcpa.com