Legal Question in Business Law in Texas

S corp shareholder

I am an S corp shareholder, I own roughly 2 %. I am not involved in this company anymore but they never asked for my shares, They weren't doing very well, but I never wanted to sell incase things got better. My concern is if this company goes belly-up and/or neglects to pay taxes am I liable for for that money if someone, like they IRS, wanted to come collect?

Sincerely,

A


Asked on 11/07/05, 6:35 pm

1 Answer from Attorneys
Peter Bradie Bradie, Bradie & Bradie

Re: S corp shareholder

You're not responsible for the business debts of the corporation. However, you are responsible for paying income tax on your 2% of whatever profits the corporation may have. You are not responsible for losses.

That's because profits for a Sub S corporation are distributed and taxed as if it was a partnership. The protection is that of a corporation.

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Answered on 11/07/05, 6:44 pm


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