Capital Gains and Losses
Capital Gains Tax Questions? Ask a Tax Advisor for Answers ASAP
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You can create a second class of nonvoting stock common stock that has equal rights to distributions as the class of stock that you own. This would allow you to retain complete control over the business, while giving your employees rights to some of the profits in the company. S corporations are only allowed to have one class of stock in terms of rights to corporate distributions to shareholder, so both classes would need to have equal rights to distributions. For example, is you sell a 20% interest and you decide to distribute $80 to yourself, the other shareholders would have to receive $20. If the two classes of stock to not have identical rights to distributions, then your corporation’s S election would terminate automatically.
I hope this answers your question. Please let me know if I can clarify anything or answer any additional questions, and I would greatly appreciate positive feedback. Thanks, Jonathan
There would not be any accounting method change. You would file a change to the articles of corporation with the Florida Secretary of the State creating a second class of stock and issue your employees stock certificates for their shares.