can a partnership be a shareholder of an s corporation
Shareholders must be U.S. citizens or residents (not nonresident aliens), and must be natural persons, so corporations and partnerships are ineligible shareholders. However, certain trusts, estates, and tax-exempt corporations, notably 501(c)(3) corporations, are permitted to be shareholders. An S corporation may be a shareholder in another, subsidiary S corporation if the first S corporation owns 100% of the stock of the subsidiary corporation, and an election is made to treat the subsidiary corporation as a ``qualified subchapter S subsidiary'' (QSub). After the election is made, the subsidiary corporation is not treated as a separate corporation for tax purposes, and all ``assets, liabilities, and items of income, deduction, and credit'' of the QSub are treated belonging to the parent S corporation.
S corporation