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What types of investors are legal to invest in a s corporation?
Wiki User
∙ 16y ago
You'll find the current rules in Subchapter S of Chapter 1 of Subtitle A of the Internal Revenue Code (Title 26 US Code), starting at section 1361.
http://www.law.cornell.edu/uscode/html/uscode26/usc_sup_01_26_10_A_20_1_30_S.html
The definition of S-corp tells how many investors, how many classes of stock, and what type and origin of investors are allowed. These things change from time to time (e.g., was 10, 35, 75, now 100 shareholder limit).
As of the last official code (Sept 2006):
shareholders must be individuals (with a few exceptions), must not be a nonresident alien, and there can be no more than 100 of them.
Some commonly used exceptions to the "individual" rule include: a 401(1) or 501(C)(3) organization exempt under 501(a), certain trusts (e.g., IRA trust, stock-voting trust), and the estate of a recently deceased individual.
Wiki User
∙ 16y ago
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