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View Full Version : Can an s corporation own an s corporation


K in CA
Dec 21, 2009, 12:15 PM
Can an s corporation own another s corporation? Some of the members are the same.

AK lawyer
Dec 22, 2009, 08:21 AM
No.

The only difference between an S corporation and a C corporation is how it is treated for tax purposes. The Internal Revenue Code doesn't allow a corporation to take advantage of Subchapter S if it is owned by another corporation.

http://en.wikipedia.org/wiki/S_corporation

dd76uj
Jan 14, 2010, 08:17 AM
Yes. If it is wholly owned. One S Corp can be the parent company to another S Corp if ownership is at 100%. In that instance, for tax purposes, everything is reported under the parent company, and the owned S Corp is treated like a division within the other S Corp that owns it, not a separate entity. State law however still treats the two as separate entities.

dd76uj
Jan 14, 2010, 08:21 AM
Federal law permits a federal S corporation to own a 100 percent ownership interest in another corporation, known as a The owned company in that case is called a "Qualified Subchapter S Subsidiary (QSSS)". Under federal law, upon election of the parent federal S Corporation, the two corporations are treated as a single entity and the assets, liabilities, income, deductions and credits of the wholly owned subsidiary are treated as if they belonged to the parent corporation.