Legal Question in Tax Law in California
an s corp with 4 officers one has 50% the other three 50%, they are splitting the assets 50% for
50% of the shares. there will be one officer left in corp, with remaining 50% of assests.
what do we need to do, to document this, for cpa, irs, and state?
is this a taxable event?
1 Answer from Attorneys
Basically, you will need to have an agreement to document the transaction, that the one remaining shareholders is effectively buying out the other 3 shareholders. Further, you will want to properly keep track of the value of the assets for tax purposes (the individuals will need to report the value of the assets), and whether or not the transaction is taxable will depend upon what the shareholders initially put into the business and the value of the assets distributed. Finally, you may have to update your filings with the CA Secretary of State.
Feel free to ask any follow up questions.
Best,
Mayer Nazarian, JD, MBT
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