Urban & Burt - Sub-Chapter S Election

1. Does the corporation meet the federal income tax definition of
     a corporation?
2. Is the corporation organized in the U.S. or under the laws of the
     U.S. or any state or territory?
3. Does the corporation avoid classification as any of the
     following:

a domestic international sales corporation (DISC) or former
DISC;

a corporation which has a possessions tax credit election
in effect;

a bank or domestic building and loan association; or
an insurance company?

4. Does the corporation have no more than 75 shareholders
     (counting husband and wife as one shareholder)?
5. Are all shareholders either individuals (none of whom are
     nonresident aliens), estates or certain kinds of trusts?
6. Does the corporation have only one class of stock, taking into
     account that so-called "debt" may sometimes be reclassified
     as a second class of stock, and that non pro rata distributions
     may sometimes create a second class of stock?
7. Is the corporation's taxable year, or does the corporation intend
     to adopt, one of the following:

a calendar year;

a year for which the corporation establishes a business
purpose;

a "grandfathered" fiscal year;

a 52/53 week year ending with reference to the last day of
December; or

an elective non-permitted fiscal year with respect to which a
corporation makes required payments?

For a corporation's first taxable year beginning after 1996, the rules relating to questions 3, 4, and 6 are modified as follows

3. Banks and other financial institutions are eligible to be S
    corporations unless they use the reserve method of accounting
    for bad debts, and a new type of trust (electing small business
    trusts) can be a shareholder.
4. The maximum number of shareholders is 75.
6. S corporations are no longer prohibited from owning 80% or
    more of the stock of another corporation.