subject: Incorporation 101: The Process of S-Corporation Election [print this page] Generally, the election is automatically terminated as of the date on which the disqualifying event occurs. However, if a corporation has both accumulated earnings and profits as well as passive investment income that exceeds 25 percent of the corporation's gross receipts for three consecutive years, the corporation election will be terminated beginning with the following tax year.
Re-election of S-Corporation Status
A corporation may re-elect S-Corporation status only on the 5th year after the year in which the termination or revocation became effective.
Incorporation 101: The Process of S-Corporation Election
