Which of the following is NOT a characteristic of an S-Corporation?

An S-Corporation is a specific type of corporation that meets the requirements outlined in the Internal Revenue Code to be taxed under Subchapter S. One defining characteristic of an S-Corporation is its restriction on shareholders. For an S-Corporation, all shareholders must be U.S. citizens or residents. This means that nonresident shareholders are not permitted, which aligns directly with the principle governing S-Corporations.

The other characteristics listed reinforce the definition of an S-Corporation. Having only one class of stock ensures that all shares confer identical rights to distribution and liquidation proceeds, which maintains the integrity of the tax election. The limitation to a maximum of 100 shareholders helps maintain the S-Corporation's simplicity compared to other corporate structures. Additionally, the requirement that all shareholders must be individuals (with some exceptions for estates and certain trusts) underlines the intent to limit the structure to a smaller, domestic group.

Thus, stating that an S-Corporation can have nonresident shareholders directly contradicts its defining elements and tax regulations, making it the correct choice for the question regarding which option is not a characteristic of an S-Corporation.