Employees of a firm counted as a single shareholder toward shareholder limit of S corporation

(a) In general Subsection (c) of section 1361 is amended by adding at the end the following: (7) Employees treated as one shareholder (A) In general For purposes of subsection (b)(1)(A), there shall be treated as one shareholder all employees (and their estates) of a corporation and any wholly owned business entities (as determined by the Secretary) of such corporation. (B) Employee defined For purposes of this paragraph, the term employee means any individual that would be an employee described under paragraph (1) or (2) of section 3121(d).. (b) Effective date The amendment made by this section shall apply to taxable years beginning after December 31, 2024.