Discussion:S Corp change of ownership
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Discussion Forum Index --> Basic Tax Questions --> S Corp change of ownership
Discussion Forum Index --> Tax Questions --> S Corp change of ownership
| 16 May 2008 | |
| Hello everyone,
I have a client (Mary) who started an S-corp with her being 100% owner. She did not invest any of her own money or property into the company. The only reason she is legally 100% owner is because of her legal status in the US. The two individuals who invested in the company did not, at the time, have legal status in the US. Now they do, and they would like to legally show that they have 100% ownership in the company. Any recommendations as to what would be the easiest way to transfer ownership from Mary to the other two individuals? Would she have to sell the company?, or can the minutes be amended? Thanks so much for your time and help Sally | |
| 17 May 2008 | |
| I smell a possible whiff of fraud here, but leaving that aside, I don't see any reason why the investors (who financed the corporation via loans, I presume) can't buy Mary out. I don't think you can go back and amend anything. | |
| 19 May 2008 | |
| Thanks Katie,
I was also wondering if it would be OK for Mary to sell 100% of her share in the company to the other two individuals, say for $1.00 just to make things less complicated. Thanks Sally | |
| 19 May 2008 | |
| If that's the reasonable fair market value of the stock at this point, I don't see why not. If it is a bargain sale, there may be some issues; for example, if the value of the stock is more than $12,000 per purchaser, Mary may have to file a gift tax return. Since Mary is your client, you just need to be sure that she is or has been fairly compensated in one way or another for whatever work she did for this corporation and that she receives fair value for her stock. If that's $1, so be it. | |
