Initially, as enacted in 1958,1 trusts could not be shareholders in an S corporation.2 In a series of enactments beginning in 1982, several different types of trusts were authorized to hold stock in an S corporation including grantor trusts,3 grantor trusts that continue to hold stock after death of the deemed owner for up to two years,4 testamentary trusts for up to two years,5 voting trusts,6 electing small business trusts7 and, in the case of a corporation which is a bank, “. . . a trust which constitutes an individual retirement account under section 408(a), including one designated as a Roth IRA under section 408A, but only to the extent of the stock held by such trust in such bank or company . . . .8 In addition, under a special rule, a “Qualified Subchapter S Trust” can hold stock in an S corporation by election with the trust treated as a grantor trust.9



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