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Jim,
Shellac does deteriorate in the can after opening. Sometimes old shellac won't dry. That's the only deterioration I know of from age. It's easy to find out if its good -- just brush some on a piece of wood and give it 30 minutes. See if it dries hard. Sand with 180 grit or so. It should produce fine dust with no gumminess.
As many coats as you like. I would say at least two. The first coat will raise the grain slightly. Sand lightly and evenly until smooth with 180 grit. The second coat will then dry smooth and nice. Additional coats will improve the appearance of figured wood.
The thing about shellac is that it dries, literally. Additional coats will dissolve the earlier coats somewhat. This is good for adhesion, but it means that you need to apply the coat and leave it alone. Don't go back and fuss with a wet coat. If you don't like it, let it dry, sand and apply another coat until you are happy.
Doug
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I agree with Doug and Jim! Apply some shellac to scrap—any wood will work—if it doesn't dry in ~20minutes (normal room temperature) it's no good.
Always sand shellac by hand with the grain of the wood. A light sanding with 320 between coats works for me and I normally don't sand or rubbout the final coat.
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Couple other relevant points about shellac, Sanding between coats isn't necessary to get good adhesion, like it is for polyurethane. As was mentioned, shellac melts into itself, so sanding in between is to achieve smoothness. The degree to which sanding is necessary and when to sand can be left to your discretion.
Also, it's my understanding that you do not want a thick build with shellac, so the number of coats will depend somewhat on the cut of the shellac. The thinner the cut, the more coats you may need, but stop when you get the look you want. Shellac is a hard, brittle film finish, so applying it too thick could lead to cracking, crazing in the future.
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This article, that came in this week, will give some more information. And yes, open or not, shellac will degrade over time.
http://360woodworking.com/bad-shellac/