### Question
How is the "electing small business trust" defined?


### Answer
The term **electing small business trust** is defined in *26 U.S.C. § 1361* as follows -

> any trust if—


(i) such trust does not have as a beneficiary any person other than (I) an individual, (II) an estate, (III) an organization described in paragraph (2), (3), (4), or (5) of section 170(c), or (IV) an organization described in section 170(c)(1) which holds a contingent interest in such trust and is not a potential current beneficiary,


(ii) no interest in such trust was acquired by purchase, and


(iii) an election under this subsection applies to such trust

#### Citation:
  - *26 U.S.C. § 1361*
  - Heading: **Subtitle A-Income Taxes > CHAPTER 1-NORMAL TAXES AND SURTAXES > Subchapter S-Tax Treatment of S Corporations and Their Shareholders > PART I-IN GENERAL**

