Common use of No protective election Clause in Contracts

No protective election. A trust can- not make a conditional ESBT election that would be effective only in the event the trust fails to meet the re- quirements for an eligible trust de- scribed in section 1361(c)(2)(A)(i) through (iv). If a trust attempts to make such a conditional ESBT election and it fails to qualify as an eligible S corporation shareholder under section 1361(c)(2)(A)(i) through (iv), the S cor- poration election will be ineffective or will terminate because the corporation will have an ineligible shareholder. Re- lief may be available under section 1362(f) for an inadvertent ineffective S corporation election or an inadvertent S corporation election termination. In addition, a trust that qualifies as an ESBT may make an ESBT election notwithstanding that the trust is a wholly-owned grantor trust.