Arkansas Contractor Business and Law Practice Exam

For an S Corporation, specific requirements must be met to maintain its status, and understanding these is crucial. One of the requirements is that shareholders of an S Corporation cannot include corporations, partnerships, or non-resident aliens; only individuals, certain trusts, and estates can be shareholders. Therefore, the requirement that shareholders must consist of corporations is incorrect, making it not a requisite for an S Corporation.

Additionally, an S Corporation must be a domestic corporation, have only one class of stock, and require the consent of all shareholders to elect S Corp status. Thus, the elements of domestic corporation status, one class of stock, and consent of all shareholders are all integral requirements for an S Corporation's formation and operation. This enforces the unique characteristics of S Corporations and ensures they operate under established regulations that provide specific tax benefits.