Answers · S corporations
Can an S Corporation Have More Than One Owner?
An S corporation can have multiple shareholders subject to eligible-shareholder and one-class-of-stock rules.
How it works
The rule, and what it turns on.
Allocations generally follow shares on a per-share, per-day basis; unlike partnerships, flexible special allocations are not generally available.
Example
60/40 shareholders generally receive 60/40 allocations for the days those ownership percentages apply.
Common mistakes
What we see go wrong, and what we do instead.
- Special allocating profit by agreement.
- Creating preferred economic rights.
A better approach
- Use partnership tax treatment if flexible economics are essential and otherwise appropriate.
Authority
Where this comes from, so you can check it.
IRC §1361; Treas. Reg. §1.1361-1.
Educational information, not individualized tax advice. Treatment depends on your facts, entity classification and tax year, and IRS instructions change. Confirm your own position with us before relying on it. Mint Associates does not provide legal services.
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