SEE-2 - Business Entities and Considerations - Section 1.4

Apply S corporation eligibility, election, basis, and pass-through rules, including the shareholder basis ordering rules and the reasonable-compensation requirement.

Identify the S corporation eligibility requirements - 100 or fewer shareholders, only eligible US shareholders, and a single class of stock - and the timing of a valid Form 2553 election. Track shareholder stock and debt basis to determine the deductibility of pass-through losses on Schedule K-1, and recognise that a more-than-2% shareholder-employee must take reasonable W-2 compensation before taking distributions.

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