Discussion:C-Corporation Stock Sale
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Discussion Forum Index --> Consumer Questions --> C-Corporation Stock Sale
| 12 October 2009 | |
| Shareholder in C-Corporation Sold there Stock for 500,000 to other shareholder in C-Corporation original basis was 10,000.
Shareholder has loan funds to C-corporation of 200,000 which were not paid back. Is the sharehold basis 210,000 for determining Gain or Loss? | |
| 12 October 2009 | |
| Loss on loan $200,000 if it is clear will not be paid back and uncollectible
Gain on stock $490,000 | |
| October 12, 2009 | |
| Can't the loan be capitalized within the corp? Add to list of reasons to not have C's. | |
| 12 October 2009 | |
| Surely the purchase/sale agreement for the stock deals with this outstanding debt. Seems to me the stockholder should have contributed the debt to the corporation as additional capital. Then there would be no COD income to the corporation and no loss to the stockholder. The amount of the debt would be added to the stockholder's basis in the stock and the gain on the sale would be $290,000.
Surely the buyer of the stock didn't buy it with this $200,000 debt to the former stockholder hanging over it. If it did, either it would have to repay the debt or, if the stockholder forgave it, recognize COD income (unless the corporation is insolvent; in that case it would reduce tax attributes to the extent of the insolvency under IRC Sec. 108). I'd look at the terms of the purchase/sale transaction. I'll bet that debt was dealt with somehow. Either that, or the parties both need new lawyers <G>. | |
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