How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Mark Taylor Your Own Question
Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 992
Experience:  Certified Public Accountant
93680669
Type Your Tax Question Here...
Mark Taylor is online now
A new question is answered every 9 seconds

Two friends started a fast food restaurant. Each one

This answer was rated:

Two friends started a fast food restaurant. Each one invested 50,000 and formed a regular corporation. The first three years they got big loses but after the 4th they had profits that were compensated with the previous loses and until today the company has paid 0 federal income tax and 0 dividends.Now one of the friends is moving out and wants his 50,000 back. No more but no less. How this would affect to the company and to the partner?

Hi, my name is Mark. I would be happy to help you with your questions. Please give me a moment to prepare your response.

Essentially, one shareholder would be purchasing the shares of the other shareholder for $50,000. For the selling shareholder there is no gain or loss on the sale. From the buying shareholder perspective, his or her basis would increase by $50,000. So their basis in the corporation's stock would now be $100,000.

It sounds like it is a good deal for the shareholder that is selling.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.

Sorry I posted that in error. I meant to copy and paste this to another question.

Mark Taylor and other Tax Specialists are ready to help you
Customer: replied 5 days ago.
Thank you.