Which of the following statements about a bypass election for an S corporation is true?

A bypass election requires consent from all shareholders because it alters the default taxation structure of the S corporation. In this context, a bypass election is related to how an S corporation can elect to treat certain distributions or income items in a way that may not align with standard tax treatment for S corporations. This kind of election typically requires unanimous agreement among the shareholders because it can significantly impact how individual shareholders report their income and pay taxes. Since S corporations are pass-through entities, any change in how income or distributions are taxed could influence the personal tax liabilities of all shareholders, thus necessitating their consent.

The specifics of a bypass election can vary depending on the tax law provisions at play, but the fundamental principle is the necessity of shareholder agreement due to the potential implications on their tax returns and the financial health of the corporation itself.