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I have a S-Corporation in California and I want to add my ...

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I have a S-Corporation in...
I have a S-Corporation in California and I want to add my sister as one of the shareholders and give her stock in the company. What will I have to do? Make a note of this in my minutes? What government organizations will I have to notify and forms that I need to fill out? Fees?
Submitted: 9 years ago.Category: Tax
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Answered in 2 days by:
1/5/2008
Tax Professional: RD, Certified Public Accountant (CPA) replied 9 years ago
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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You will have to make a note of this in your minutes. Is this a sale of stock from an existing stockholder or issue of new certificates from the corporation?
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Customer reply replied 9 years ago
My Corporation is a family business. My Dad, Mother, and myself are the stockholders of the company. We just want to give my sister 5% of the shares. What is the easiest way (sale of stock or issue new certificates) with minimal paperwork to issue a few shares to my sister?
Customer reply replied 9 years ago
Relist: I still need help.
Tax Professional: RD, Certified Public Accountant (CPA) replied 9 years ago

If it is a small corporation than I would think that all the shares must have been issued. So you may not be able to issue more share unless you do the paper work in this regard. I would suggest that you all sell part of the shares to to your sister or you all can also gift part of your share to her so that she gets 5% share.

This would a rather simpler way to handle this situation.

 

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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Customer reply replied 9 years ago
Reply to RD's Post: okay, I would like to sell some of my shares to my sister. I will record this in my minutes but what governments forms need to be filled out? Will I have to submit form 2553 again?
Tax Professional: RD, Certified Public Accountant (CPA) replied 9 years ago

Once an S election is made, it remains effective as long as she is qualified to be a S Corp stockholder. SO you do not have to submit the Form 2553 again.

You will report her share(change of ownership %) on the tax return that you file. There is no separate paperwork required to be filed to the IRS.

 

Let me know if you have any question. Bonus and Feedback will be highly appreciated!!!

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

RD
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