Question

Which statement is incorrect with respect to the number-of-shareholders test in filing an S election?

a. Grandmother Adela and granddaughter Maria count as one shareholder.
b. Husband Jaime and ex-wife Isabel count as one shareholder.
c. Husband Jaime and wife Maria count as one shareholder.
d. Husband Jaime and the estate of wife Maria count as one shareholder.
e. None of these statements are incorrect.

Answer 1

The correct statement that is incorrect with respect to the number-of-shareholders test is d. Husband Jaime and the estate of wife Maria count as one shareholder.

Step-by-step explanation:

In order to file an S election, the number-of-shareholders test must be met. This test looks at the number of shareholders who own stock in the company. The statement that is incorrect is option d. Husband Jaime and the estate of wife Maria do not count as one shareholder. The estate of wife Maria is considered a separate legal entity and counts as its own shareholder. Therefore, the correct answer is d. Husband Jaime and the estate of wife Maria count as one shareholder.