I would like to know, if a "C" Corporation can own an "S" Corporation?

Hello Sean:

Think of a corporation as a taxpayer, who has the same rights you do as a taxpayer, except that a corporation can't vote, and it doesn't die.

Anything YOU can own, a corporation can own.

excon

Consult with appropriate tax professionals whenever getting into something significant.

Under Internal Revenue Code Section 1361(b)(1), only certain shareholders can be part of an S corporation (generally just resident individuals and a couple kinds of trusts) and C corporations are certainly not part of the mix.

If you set this up, your S corporation would immediately turn into a C corporation as its election to be taxed as an S corporation would be taken away.

Tax CPA is right, a C Corp. cannot own an S Corp. However, an S Corp can own a C Corp.

azlaw97 is exacly 100% WRONG!! Exactly opposite.

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Originally Posted by djerry4231

azlaw97 is exacly 100% WRONG!! Exactly opposite.

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Wrong. Azlaw97 is right.

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For purposes of this subchapter, the term “small business corporation” means a domestic corporation which is not an ineligible corporation and which does not—
(A) have more than 100 shareholders,
(B) have as a shareholder a person (other than an estate, a trust described in subsection (c)(2), or an organization described in subsection (c)(6)) who is not an individual,

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www.law.cornell.edu/uscode/26/13http://61(c)(6).html

Translation: An "S corporation" may not have another corporation as a shareholder.

A corporation is not an "individual".

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Originally Posted by AK lawyer

Wrong. Azlaw97 is right.



www.law.cornell.edu/uscode/26/13http://61(c)(6).html

Translation: An "S corporation" may not have another corporation as a shareholder.

A corporation is not an "individual".

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Thank you for proving my point... A C corp can own a subchapter S or LLC... not the other way around.

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Originally Posted by djerry4231

Thank you for proving my point.....A C corp can own a subchapter S or LLC....not the other way around.

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Huh? I didn't prove your point.

The "owned" subchapter S corporation must be owned by an individual, not by another corporation, subchapter C,D, E, F, or whatever.

Sure, the C could own the S, but in that case the S would not qualify to be an S.

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Originally Posted by AK lawyer

Huh? I didn't prove your point.

The "owned" subchapter S corporation must be owned by an individual. Not by another corporation, subchapter C,D, E, F, or whatever.

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Ok... I see, my apologies. How about an LLC then? The reason for my research was that I'm forming a holding corporation and I wanted to know what structure the sub companies should or needed to be. I responded previously as to how I understood corporation ownership to be.

Thank you in advance

Jerry

A LLC is not a "person", an "estate, a trust... or an organization described [ in sect. 501(c)(3); i.e. a qualifying non-profit]. So no.