Do Sub Chapter "S" Corporations retain their status regardless of the number of stockholders?

Subchapter "S" Corporations are designed to offer certain tax advantages to small businesses by allowing profits and losses to be passed through to shareholders for federal tax purposes. However, there are specific criteria that must be met to maintain this status. One of the crucial requirements is the limitation on the number of shareholders. An S corporation can have a maximum of 100 shareholders. If the number of shareholders exceeds this limit, the corporation will automatically lose its S corporation status and be taxed as a standard C corporation.

In addition, the shareholders themselves must meet certain qualifications; for example, they must be U.S. citizens or residents, and certain types of entities (like corporations or partnerships) cannot be shareholders.

If a Subchapter "S" corporation has more than 100 stockholders, it will not retain its status, thereby making the answer clear that this exemption does not apply under the conditions specified.