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Discussion Forum Index --> Advanced Tax Questions --> Sub-S shareholder marries his employee
Discussion Forum Index --> Tax Questions --> Sub-S shareholder marries his employee
Yankee Fan (talk|edits) said:
| 5 September 2008
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| 100% Sub_S shareholder owns small bar (minimum net income - does not take a paycheck) with occasional cash payments and tips to bartenders but does most of the work himself. He uses VA for medical plan and has no medical insurance. I convince him he must have payroll and he puts his favorite bartender (very popular with customers) on payroll to allow for her EIC and also established health insurance plan for her and her two small children. He still won't take paycheck...maybe next year...and life goes on this way for a couple of years. Client now gets hit with Cupid's arrow and wants to marry the bartender. If they get married will he lose the Corp insurance premium deduction for her and what if she changes to family policy and includes him on insured list? This is not Comm Prop State if that matters at all. Does marriage make her a > than 2% shareholder? Would like to find a solution to keep the Corp deduction and not have to run thru W-2 if possible...thanks for suggestions
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JR1 (talk|edits) said:
| September 5, 2008
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| It's gotta go thru the W2.
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Riley2 (talk|edits) said:
| 7 September 2008
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| The deduction will be lost since his wife will be considered to be a 100% shareholder for fringe benefit purposes.
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"Shoebox" (talk|edits) said:
| 7 September 2008
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| Could you re-form the business as a sole proprietorship, then cover the employee's health insurance under Sec. 105? I not very conversant in this subject, but at first blush, this seems OK. Any comments from others?
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Riley2 (talk|edits) said:
| 7 September 2008
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| Yes, but it would be better to use Sec. 106 since 105 contains nondiscrimination rules.
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JR1 (talk|edits) said:
| September 8, 2008
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| To 're-form' the business means liquidating the corp, recognizing gains, if any, in doing so. All assets are deemed sold at FMV.....
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CrowJD (talk|edits) said:
| 9 September 2008
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| He's been hit with Cupid's arrow allright. I'll give you even money he'll be sitting on the curb in front of his bar in a couple of years watching her (new owner) walking in with her strapping blonde 26yo boyfriend. Of course,love is blind (lust is blind, deaf and dumb). He needs a wise old lawyer or shrink to counsel him on an emergency basis.
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Yankee Fan (talk|edits) said:
| 9 September 2008
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| I'll turn him on to ya when that happens Crow...lol
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CrowJD (talk|edits) said:
| 9 September 2008
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| It's like a Greek Tragedy YF, you know what's coming, but you're powerless to do anything to help the old gent. They won't listen, do the best you can for them, the VA will make sure he won't suffer long anyway.
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