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I was in business in a sub s corporation for 19 years. I decided

I was in business in...
I was in business in a sub s corporation for 19 years. I decided to get out and my partner bought my stock. I had 51% of the stock. He had 49%. The buy out was January 1, 2010. In addiditon to my writen buy out agreement, I would be liable for 2009 taxes and I would also receive my 2009 profit distribution. This was a verbal agreement. The corporation did pay my 2009 taxes due but have not given me the balance of my 2009 profit (the profit less the taxes they paid). With out this agreement in writing, does he not owe me the balance of the distribution for 2009?
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Answered in 13 minutes by:
9/3/2013
Barrister
Barrister, Attorney
Category: Business Law
Satisfied Customers: 39,525
Experience: 17 years practicing attorney, JD, BA, MBA
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Hello and welcome! My name is XXXXX XXXXX I will try my level best to help with your situation or get you to someone who can.
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With out this agreement in writing, does he not owe me the balance of the distribution for 2009?
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From a purely legal perspective, if this was part of the buy out deal, then yes, he owes you the money for the distribution. An oral contract is legally binding if there is an offer (to pay you the distribution) and acceptance (you accepted the offer) and consideration (usually money, like paying taxes). So I would opine that you have a legally binding oral contract.
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However, the problem will be in proving it. If the buyer and the bookkeeper are willing to perjure themselves in court and lie to state that there never was any such agreement for the distribution, only the taxes, it might be a very hard case to prove.
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I don't know how much money we are talking about, but you could incur several thousand or more in attorney fees in a breach of contract suit if you pursued this and I wouldn't be very optimistic about the outcome.
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It is not what you know to be the truth, it is what you can prove. But even if it was hard to prove, if you filed suit, you might "encourage" them to settle with you because if they are a Sub S, they will have to hire their own attorney to defend against your claim and it might be cheaper to settle.
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Thanks
Barrister
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Customer reply replied 4 years ago

Is he correct that even though my buy out was 2010 I am not entitled to my distribution from 2009? Once my stock was sold even though it was after 2009 year?

Is he correct that even though my buy out was 2010 I am not entitled to my distribution from 2009?

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I couldn't say for sure without actually reviewing the compensation agreement and when it said that profit calculations became final for the year. But presumably if the buyout was in 2010, any distribution for 2009 would have already vested and you would be entitled to payment.

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This is yet another point you could press if you sued... You could look at how past distributions were paid out and when they were paid. Assuming that nothing had changed with your Bylaws, the timing and procedure for payment should continue on as an established protocol.

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So if you went back and looked at the past 10 years or so and showed how the profit distribution was paid out in the subsequent year, I think you would have hard proof that this was still the case and that the other owner is still liable to pay you your 09 share of the profits.

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.

Thanks

Barrister

Barrister
Barrister, Attorney
Category: Business Law
Satisfied Customers: 39,525
Experience: 17 years practicing attorney, JD, BA, MBA
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