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Derby Corporation is a calendar-year taxpayer that is owned equally by Vivian, Rob, Danny, and...

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Accounting

Derby Corporation is a calendar-year taxpayer that is owned equally by Vivian, Rob, Danny, and Doug Derby. At the close of business on May 31, Rob Derby sells his 25% stock interest to Paula Bryan. Which of the following statements about the S election is correct?

Paula has 30 days to terminate the S election, otherwise the election remains in place for the entire year and all subsequent years.

A new S election form must be filed by June 30 of the same year, with all shareholders consenting to the election. If a new S election is not filed, the election terminates on June 30 of that year.

Paula must consent to the S election, otherwise the election terminates at the close of business on May 31.

None of the above statements are correct.

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