An S corporation is a corporation that has made a voluntary election to be taxed under the rules of Subchapter 1 of the Internal Revenue Code of the U.S. While an S corporation is a creation of federal tax law, it is also recognized by many states for taxation purposes and is subject to the laws in the state in which it was incorporated. As required under the Internal Revenue Code, S corporations may only issue one class of stock. With a single class of stock, it becomes very simple to calculate the capital percentage. The two types of ownership percentage business owners and investors are commonly concerned with are the ownership percentage (non-diluted) and the diluted ownership percentage.

### Things You'll Need

- Total number of ownership shares you wish to calculate ownership percentage
- Total number of ownership shares outstanding

- Total number of shares tied to convertible securities outstanding
- Total assets of the corporation (optional)

## Calculation of Basic Capital Percentage

Divide the total number of ownership shares you wish to calculate ownership percentage for by the total number of ownership shares outstanding. The result will be a decimal, such as 0.2550.

Move the decimal point two places to the right and express as a percentage. For example, 0.2550 becomes 25.50 percent. You have now calculated the basic capital percentage.

Multiply the basic capital percentage by the corporation's net assets to determine the capital value allocatable to the ownership interest you are examining.

## Calculation of Diluted Capital Percentage

Add the total number of ownership shares outstanding to the total number of shares tied to convertible securities outstanding. This gives you the total number of ownership shares outstanding if all options are exercised.

Divide the total number of ownership shares you wish to calculate ownership percentage for by the total number of ownership shares outstanding if all options are exercised. The result will be a decimal, such as 0.2550.

Move the decimal point two places to the right and express as a percentage. For example, 0.2550 becomes 25.50 percent. You have now calculated the diluted capital percentage.