My IRA owns shares in a c corporation. I was just notified that the corporation wants to elect Subchapter S status.

I didn't think an IRA could own S corp stock.

1) Can this company elect without my permission?

2) Can the company buy back my current stock even if I own other shares of this company outside of my IRA or would that be a prohibited transaction?

Regarding your first point, I think the S Corporation election would fail based upon the provision #3 and provision #8. In general, a Regular C Corporation choose to be taxed as an S-Corporation if it meets the following criteria.

1. The company is (a) a domestic corporation, or (b) a domestic entity eligible to elect to be treated as a corporation that timely files Form 2553 and meets all the other tests listed below.

2. The company has no more than 100 shareholders. (A husband and wife and their estates are treated as one shareholder for this test. A member of a family can choose to treat all members of the family as one shareholder for this test. All other persons are treated as separate shareholders).

3. The only shareholders are individuals, estates, certain exempt organizations, or certain trusts.
Your IRA funds would not be eligible to invest in an S corporation stock, based on this provision.

4. The company has no nonresident alien shareholders. (Only shareholders that are US citizens or resident aliens would qualify.)

5. The company has only one class of stock.

6. It is not one of the following ineligible corporations:
a. A bank or thrift institution that uses the reserve method of accounting for bad debts under section 585.
b. An insurance company subject to tax under sub-chapter L of the Code.
c. A corporation that has elected to be treated as a possessions corporation under section 936.
d. A domestic international sales corporation (DISC) or former DISC.
e. It has or will adopt or change to one of the following tax years.
f. A tax year ending December 31.
g. A natural business year.
h. An ownership tax year.
i. A tax year elected under section 444.

8. Each shareholder consents to the S-Corporation election.
I think the S Corporation election would fail assuming you have not given consent, thus this provision would not be satisfied.

Regarding your second point, I am not really clear about this as I have not found a specific provision that would prohibit the transactions. However, the S corporation election would certainly fail as you as a shareholder have not given a written consent and that per provision #3, it seems that the IRA's are not permitted in invest in an S Corporation.

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