Which of the following statements about the termination or revocation of an election to be taxed as an S corporation is true?
A. Once an election is revoked, a new election cannot be made for 3 years.
B. The occurrence of an event that terminates an S corporation election causes the election to be revoked as of the first day of the taxable year.
C. The termination of an S corporation election causes all prior-year losses that have not been deducted by the shareholders to be lost.
D. Having passive investment income of more than 25% of gross receipts in its initial year will not result in the termination of a corporation's status as an S corporation.
Answer: D. Having passive investment income of more than 25% of gross receipts in its initial year will not result in the termination of a corporation's status as an S corporation.