One of your clients, Texas, Inc., is considering electing S status. Both of Texass equal shareholders paid

Question:

One of your clients, Texas, Inc., is considering electing S status. Both of Texas’s equal shareholders paid $30,000 for their stock. As of the beginning of 2022, Texas’s Subchapter C NOL carryforward is $110,000. Its taxable income projections for the next few years are as follows. Will you counsel Texas to make the S election in 2022? Explain.

2022 2023 2024 2025 $40,000 25,000 25,000 25,000