Discussion:Adding a shareholder
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Discussion Forum Index --> Advanced Tax Questions --> Adding a shareholder
Discussion Forum Index --> Tax Questions --> Adding a shareholder
| 6 November 2007 | |
| I have a client who would like to add his son to an S corp. The S corp holds commercial real estate. If the son does not make a capital contribution for his interest should the interest be considered a gift. What would be the best way to transfer the interest in the S corp? | |
TheTinCook (talk|edits) said: | 7 November 2007 |
| Gift up to the exclusion amount.
Is the son working for the S-Corp? | |
TheTinCook (talk|edits) said: | 7 November 2007 |
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TheTinCook (talk|edits) said: | 7 November 2007 |
| Glad you guys liked it. I can't believe I misspelled estate...still worth a chuckle though.
Back to the OP. If the son is working for the S-Corp, you might want to have some of the stock given to him as payment for services. Especially if the son has no other earned income. | |
DouglasHolbrook (talk|edits) said: | 18 November 2007 |
| You can use non-voting stock to transfer to your sone and get a discounted valuation on the stock. | |
| 19 November 2007 | |
| If you have voting and nonvoting stock, is that not two classes of stock which would terminate the S election? | |
DouglasHolbrook (talk|edits) said: | 19 November 2007 |
| Non voting stock is NOT a second class of stock for these purposes. Reg. 1.1361-1(l)(1) | |
Ksnoopytax (talk|edits) said: | 20 November 2007 |
| LoL I love the elephant. You know...I bring up to my boss often times when we discuss client issues that having real estate in a corporation is a bad idea because if you distribute the building to the shareholders, the corporation will pay tax on the gain under Section 311(b). My boss often rebuttles with the fact that the client doesn't plan on ever selling the building so why does it matter if the property is in a corporation or not? Besides the gain on distribution, are there any other disadvantages to holding real property in a corp? | |
| 21 November 2007 | |
| I would have to say never say never. What if the TP outgrows the building and has to sell it to build a new one , etc. | |
| 21 November 2007 | |
| What's the harm if the property is actually sold and not distributed? | |
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