Legal Question in Business Law in Illinois

close, ''S'' corp ok?

I'd like to form a small corporation because I'd like to have a business entity to work from while helping friends and family with their own business ventures. I am a business / accounting student in my 2nd year and would like the experience of dealing with certain details of running a small corporation. I believe that it is ok for an IL corp to be designated as a ''Close'' corp AND as an ''S'' corp on the tax filing. If I understand everything right, this structure will also allow me to invest in publicly traded securities as long as I am the only stockholder. Also, if I were to sell one share of stock, I would need a securities license because the other stockholder would be relying on me to manage an asset that is partially a security. How close or far am I from understanding this correctly?


Asked on 9/12/06, 6:36 pm

1 Answer from Attorneys
David K. Staub Staub Anderson LLC

Re: close, ''S'' corp ok?

A corporation can be a "close" corporation under Illinois law and elect S corporation treatment under the Internal Revenue Code. They are completely different things.

As to whether you need a securities license in the situation you described, the answer is not a simple yes or no. Again, at least to some extent, the question of sale of a share of stock in the corporation and what activities the corporation conducts are separate. The only correct answer to your question is "not necessarily."

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Answered on 9/12/06, 8:20 pm


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