contribution deductions. Eligibility A corporation is "eligible" if it: Has no more than 100 shareholders, Has shareholders who are all individuals (exceptions are made for various tax-exempt organizations, estates, and trusts) Has no nonresident as shareholders, and Has only one class of stock. A limited liability company (LLC) is eligible to be taxed as an S corporation under the check-the-box regulations at § 301.7701-2. The LLC first elects to be taxed as a corporation, at which point it becomes a corporation for tax purposes; then it makes the S corporation election under section 1362(a). Shareholder requirements Shareholders must be U.S. citizens or residents (not nonresident), 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. Spouses (and their estates) are automatically treated as a single shareholder. Families, defined as individuals descended from a common ancestor, plus spouses and former spouses of either the common ancestor or anyone lineally descended from that person, are considered a single shareholder as long as any family member elects such treatment. Stock requirements An S corporation may only have one class of stock. A single class of stock means that all outstanding shares of stock confer "identical rights to distribution and liquidation proceeds," i.e. profits and losses are allocated to shareholders proportionately to each one's interest in the business. § 1.1361-1(l)(1). Differences in voting rights are disregarded, which means that an S corporation may have voting and nonvoting stock. If a corporation meets the foregoing requirements and wishes to be taxed under Subchapter S, its shareholders may file Form 2553: "Election by a Small Business Corporation" with the Internal Revenue Service (IRS). The Form 2553 must be signed by all of the corporation's shareholders. If a shareholder resides in a community property state, the shareholder's spouse generally must also sign the 2553. The S corporation