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I HAVE CLIENT THAT WILL FORM A S CORP. THER WILL BE 3 SHAREHOLDERS

- ONE WILL PUT IN...
I HAVE CLIENT THAT WILL FORM A S CORP. THER WILL BE 3 SHAREHOLDERS - ONE WILL PUT IN $60k FOR 40% OWNERSHIP, THE OTHER TWO WILL PROVIDE THEIR SERVICES IN EXCHANGE FOR THE ONWERSHIP INTEREST OF 30% EACH. I REALIZE THAT THE SERVICES PROVIDED WILL BE INCOME TO THEM. IS THERE ANOTHER WAY TO STRUCTURE THIS?
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Answered in 2 minutes by:
8/28/2013
Anne
Anne, Master Tax Preparer
Category: Tax
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Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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Anne :

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The treatment of sweat equity in S corporations is normally handled through a salary, plus the gradual transfer of shares to the individual providing the labor in exchange for an ownership interest.

Anne
Anne, Master Tax Preparer
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Experience: Enrolled Agent with 25 Years Experience specializing Individual and Small Businesses
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