R is a shareholder in a newly?formed corporation that is involved in real estate development. There are five shareholders and income will be derived from rental properties only. The other four shareholders wish to elect Subchapter S status. R does not want to and tells the others he has doubts about the corporation qualifying for Subchapter S treatment. What result?
?R is right - there will be too much passive income. The election to go Subchapter S must be unanimous.
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