Does the following sentence have a compound subject because of the "or"? If so should I use "is" because team is singular?
Students from Mr. Perry’s class or the basketball team is/are selling candy to raise money.
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Yes, It has the compound subject. (Students from Mr. Perry’s class/ Students from the basketball team)
But, you should not use "is" because the team is singular. Here, you have to consider the meaning. To avoid redundancy, the word 'students' has not be reiterated in front of "the basketball team". But consider, it actually means, "Students from the basketball team".
Therefore, the answer should be, "are".
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