They would all like to avoid personal liability for debts of the business and$/$or wrongful acts of each other. They would also like to minimize taxation. Thea is in favor of a corporation and asks if there is any problem with that form of business. Josef and Danny say that they are concerned about double taxation with a corporation and that they are in favor of a partnership, even if personal liability is a concern. Thea said that she was concerned about the deductibility of losses if the corporate form was chosen. She did some research and suggested an S corporation to Josef and Danny which she claimed would avoid the problem of double taxation.

Is there an impediment to the business qualifying as an S Corporation, based on the information available?

$$ Yes, because there must be at least $100$ shareholders involved.

No$.$

Yes, because a business must operate as a general corporation for at least two years before converting to an $S$ corporation.

Yes, because at least one$-$third of the shareholders in an $ corporation must be corporations.

Yes, because a business must operate as a partnership for at least two years before comverting to an $ corporation.