An “S election” is the process by which a company designates itself as an S Corporation (versus, for example, a C Corporation) for purposes of the United States Internal Revenue Code. S Corporations are selected for their tax benefits. S Corporations generally do not pay federal income tax but pass the tax liability for their profits through to their stockholders. Consequently, profits earned by an S Corporation will be taxed only once. Similarly, losses of an S Corporation flow through to the stockholders and may be deducted by the stockholders on their individual tax returns (subject to certain significant limitations).