Is it possible to inadvertently lose S corporate status and revert to C corporate status?
30.1 Yes. You may lose it automatically if you violate the I.R.S. rules. For example, you can lose it if you have 75 shareholders and one of your shareholders gives a share of stock to someone else even a member of a family, such as a child causing you to exceed the shareholder number limit, unless the I.R.S. decides to waive the automatic termination that results under the law. Note that when a husband and wife own stock as tenants in common, or joint tenants, or, as community property, they are counted by the I.R.S. as one shareholder in terms of this S corporation requirement. However, if the spouses own the shares individually, they are counted as two shareholders even if they also own some stock in the corporation jointly. If either spouse, but not both, owns shares individually as well as jointly, these two individuals count as one shareholder. And, if two shareholders not legally married own stock jointly, the I.R.S. counts them as two shareholders. 30.2 If you issue a second cl
