RE: [taxchat] S Corp ownership

You don’t think it will be an issue that the wife did not receive a wage?  I am going home now, but of course I now get to fight w/ my son to do his homework and go to soccer practice!  Some days kill me, and this is one of them!

 

 

cris

 

From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Arnold M. Socol
Sent: Tuesday, September 09, 2008 3:26 PM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] S Corp ownership

 

Do they have a Corporate Kit - Minute Book with Stock Certificates and Shareholder register?  Although we should not give legal advice without a license, at times I will walk the client thru the details and let them do the forms and sign them - or send them to a lawyer to do it.  And since nothing is in writing yet - why not issue the shares 49 and 51 from 1/1/07 and there doesn't have to be a change on the first of next year.....and get some rest.

 

Arnie

 

 

----- Original Message -----

From: Cris Kelly

To: taxchat@yahoogroups.com

Sent: 09/09/2008 6:10 PM

Subject: RE: [taxchat] S Corp ownership

 

Arnie –

Thanks for the help.

In this situation, only the husband received a salary, and it is a reasonable amount.  I didn’t even think about the repercussions of the wife not receiving a salary.  Is that going to be an issue, she doesn’t do anything other than TRY to keep the books.

How would recommend handling?  I don’t have that much experience in this area, but I would say since the couple doesn’t have it in written (like you noted below) that the shares were actually transferred.  AND the wife already told me that they had to change it again at the beginning of 2008 to 49% / 51%.  To leave the shares as it, husband 100%, and deal with the changes next year.

Please advice,

Thanks,

Cris

From: taxchat@yahoogroups.com [mailto:taxchat@yahoogroups.com] On Behalf Of Arnold M. Socol
Sent: Tuesday, September 09, 2008 2:19 PM
To: taxchat@yahoogroups.com
Subject: Re: [taxchat] S Corp ownership

Cris,

Here is a case whereby I would simply shortcut it and show 50% of the numbers on each K-1.  But for legal matters potentially down the road advise the client and make note that they have to sign some document showing the transfer of shares and provide you with a copy and date it January 1, so there is no proration for time.  Basis then would be 50-50% of what was there at prior yearend. WE TAX PREPARERS CAN BE SUED FOR all KINDS OF REASONS.  Should this couple have a divorce and a property settlement and there is nothing but a tax return showing 50% each, and you prepared it, you may be inviting yourself into the battle unnecessarily.

Also what about the wife being on payroll - they are both employees and must take reasonable salary, not just a distribution of profits without any SS and MEDCare tax.

Arnie 

----- Original Message -----

From: Cris Kelly

To: taxchat@yahoogroups.com

Sent: 09/09/2008 5:06 PM

Subject: [taxchat] S Corp ownership

I have a S corp that for 2006 there was 1 shareholder.  In 2007 he added his wife, so now they each own 50% of the company. 

For some reason, I am having issues with how to report this change on the return.

I know that Married couples (related) count as one shareholder.  So if I just look at that, it seems that I don’t have to list the wife.  But that also doesn’t make any sense, because she is another shareholder so she should receive her own K1.  But then if I do that how to I account for how she received the shares, I am assuming that I don’t really need to make any adjustment since it is a married couple other than list her separately.  If the new shareholder was not a relative wouldn’t I have to account for how they acquired shares, purchased or given?

Sorry if my question doesn’t make any sense I have been slammed today with work and meetings, and I know that I am tired.  But I really want to get this return finished today.

Also, for all you who responded to my question about the Schedule L, I have taken all your advice into consideration for the next tax season I will require a complete set of books from partnership and corps.  But it is too late to start for this season.

Thanks for any help you can offer.

Cris

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