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William Ellis, CPA
William Ellis, CPA, CPA
Category: Tax
Satisfied Customers: 296
Experience:  Over 15 years of experience in public accounting
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A sub s corp has two pieces of real estate. For example purposes,

Resolved Question:

A sub s corp has two pieces of real estate. For example purposes, one is worth 1 million and the other is worth 500,000. There are 3 shareholders. How can we divide/distribute the assets so that one of the shareholders takes possession of the 500,000 piece and leaves the s corp, leaving the remaining shareholders with the remaining 1 million dollar asset?
Submitted: 5 years ago.
Category: Tax
Expert:  William Ellis, CPA replied 5 years ago.

William Ellis, CPA :

Hello and thank you for allowing us at Just Answer to assist you. To maintain S-Corp status, all distributions need to be equal among stock ownership. Because of this, I would recommend the S-Corp redeem the shareholder's stock by paying him with the $500,000 real estate. There may be adjustments depending on the shareholders' bases, but this appears to be the simplest solution. Thanks, Bill

Customer:

Specifically, how would this be accomplished? i.e.--how would the s-corp redeem the shareholder's stock by paying him with the $500,000 real estate?

William Ellis, CPA :

The Company would simply transfer title of the property to him. On the books, his shares would be debited and the property would be credited. But, I would consult your attorney to make sure everything is handled properly.

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