None of the shareholders can be non-resident aliens.
4. The corporation must have only one class of stock. It may have "straight debt" but not debt which is convertible into equity. Voting rights can be staggered or varied, but all shares must have the same rights to distributions and in liquidation.4
Once S status is elected, it remains in effect unless it is voluntary revoked, with the consent of more than 50 percent of the shareholders, or is otherwise terminated by a "disqualifying event." Once revoked or terminated, S status can not be re-elected for five years, except with the consent of the IRS.
Partnerships can be formed by a simple agreement among the partners. Any natural person, including corporations and aliens, can be a partner. No government filings are necessary. The IRS definition of a partnership is "the relationship existing between two or more persons who join together to carry on a trade or business with each person contributing money, property, labor or
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