S corporations (also known as Subchapter S corporations) are corporations that elect to pass corporate income, losses, deductions, and credits through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income at the entity level.
To qualify for S corporation status, the corporation must meet the following requirements:
Be a domestic corporation
• Have only allowable shareholders
o may be individuals, certain trusts, and estates, and
o may not be partnerships, corporations, or non-resident alien shareholders
• Have no more than 100 shareholders
• Have only one class of stock
• Not be an ineligible corporation (i.e., certain financial institutions, insurance companies, and domestic international sales corporations).

In Delaware, as in other states, an S corporation is a special type of corporation that's designed to avoid the double taxation that typically occurs with traditional C corporations. This is achieved by electing to have profits, losses, deductions, and credits pass through to shareholders, who then report these on their personal tax returns and pay tax at their individual rates. To be eligible for S corporation status, a corporation must be domestic, have only allowable shareholders (which include individuals, certain trusts, and estates, but not partnerships, other corporations, or non-resident aliens), have no more than 100 shareholders, have only one class of stock, and not be a certain type of ineligible corporation (like some financial institutions or insurance companies). Delaware state law aligns with federal regulations for S corporation status, and the election is made with the IRS using Form 2553. It's important for corporations in Delaware considering this status to comply with both federal requirements and any relevant state-level regulations, including annual report filings and maintaining proper corporate formalities.