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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29796
Experience:  Taxes, Immigration, Labor Relations
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What do I do if the other shareholders in a S corporation

Customer Question

What do I do if the other shareholders in a S corporation are giving themselves distributions without the consent of all shareholders?
Submitted: 1 year ago.
Category: Tax
Expert:  Lev replied 1 year ago.

Unfortunately - there is nothing you may do tax wise...

That would be a civil matter between shareholders.

Expert:  Lev replied 1 year ago.

As you might know if S-corporation realizes taxable income - that income is passed to all shareholders according with their ownership percentage - REGARDLESS if income is distributed or not.

So other shareholders potentially might be liable for taxes on that distribution made without consent.

The best way out - to negotiate between all shareholders ,

but if that will not provide any positive results - the only way would be to sue that shareholder for damages and violation of the shareholder agreement.


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