### Question
How does DEFINITIONS; MISCELLANEOUS define affected shareholders?


### Answer
Under *26 U.S.C. § 1377*, **affected shareholders** is defined as:

> the shareholder whose interest is terminated and all shareholders to whom such shareholder has transferred shares during the taxable year

#### Citation:
  - *26 U.S.C. § 1377*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter S-Tax Treatment of S Corporations and Their Shareholders > PART IV-DEFINITIONS; MISCELLANEOUS**

