Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax

My brother and I started a company in 2011. It was

Customer Question
My brother and I...

My brother and I started a company in 2011. It was understood that we would take a very low salary while building the company in order to realize the compensation when the technology was sold to a larger company. A large publicly traded corporation offered to by us out via purchasing our shares in the company. We issued these shares to ourselves shorty before the purchase of the company. How do my brother and I figure our basis in the shares sold?

Submitted: 2 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 3 minutes by:
12/18/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 13,482
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

Hi. My name's Lane. ...

I hold a law degree (J.D.), with concentration in Tax Law, Estate law & Corporate law, an MBA in finance, a BBA, and CFP & CRPS (Chartered Retirement Plans Specialist) designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice to clients on three continents since 1986.

If you’ll please bear with me for a minute I’ll type up my initial response, and then we can go from there if you have further questions on this.

Ask Your Own Tax Question
Customer reply replied 2 months ago
Thank you.
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 months ago

The answer depends on the entity type.

...

If your business type is C-Corp, the your basis is very simple ... the total of what you've invested.

...

For S-Corps, (a pass-through rather than a separate;y taxable entity such as the C-Corp) it's more complicated.

...

But for the S-Corp generally, it's Capital Contributed (just as with the C-Corp) that first increases basis above zero, the profits increase basis, losses decrease basis, distributions (non-taxable becasue all profit is taxed) decrease basis.

...

Loans from shareholders to the S-Corp also increase basis, but are treated a little differently.

...

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 months ago

It's also important to remember that salary for the S-Corp affects basis INdirectly. The salary of the S-Corp lowers it's profits (which increasaes basis).

...

But again, remember that distributions - nontaxable - OF that profit (or of initially contributed capital) lower the basis

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 2 months ago

What's your entity type?

Ask Your Own Tax Question
Ask Wallstreet Esq. Your Own Question
Wallstreet Esq.
Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
586 Satisfied Customers
Experience: 10 years experience

Wallstreet Esq. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,312 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,362 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

14,120 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,652 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
Our club which is incorporated and non-profit received a
Our club which is incorporated and non-profit received a 1099-MISC for grant money we received. I am not sure what to do with it. … read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
735 satisfied customers
S-Corp distributes large share of profits each year. CFO
S-Corp distributes large share of profits each year. CFO allowed some shares to be bought after quarter, but allowed distributions for immediate preceding quarter. When shares were sold in early part … read more
Lane
Lane
JD, CFP, MBA, CRPS
13,482 satisfied customers
I am late filing my 1099 Misc for non-employee compensation.
I am late filing my 1099 Misc for non-employee compensation. I did not order enough forms so wanted to do it onlne so I won't be any later than today. :( … read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,058 satisfied customers
Trying to determine the tax status of a non profit group. We
trying to determine the tax status of a non profit group … read more
Lane
Lane
JD, CFP, MBA, CRPS
13,482 satisfied customers
20% tax deduction for pass through entities is limited for
Hi there. 20% tax deduction for pass through entities is limited for service providers like doctors. My question is: An S-Corporation provide medical billing services like sending claim, collecting mo… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,311 satisfied customers
100% S Corp shareholder distributed a vehicle to himself.
100% S Corp shareholder distributed a vehicle to himself. Original cost 59711, A/D 54073, note 48313. He used the vehicle as a trade in for a personal vehicle. I would like 1120 S and k-1 assistance.… read more
taxmanrog
taxmanrog
Master\u0027s Degree
815 satisfied customers
I have a shareholders distribution based on business sale -
I have a shareholders distribution based on business sale - I don't know where to report on my taxes … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Are religious (church) non-profits required to file state
Are religious (church) non-profits required to file state and federal taxes annually? … read more
Lane
Lane
JD, CFP, MBA, CRPS
13,482 satisfied customers
Or Lev" Parsing through the pass-through section of the new
quot;For Lane or Lev"Hey Guys,Parsing through the pass-through section of the new tax legislation and wondering if you can explain this provision, particularly the meaning of part (2) b?Determination … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
In the new tax law 20 percent of revenue for pass-through
In the new tax law 20 percent of revenue for pass-through entity such as corporations filed with chapter S is deductible, is there a threshold for gross income on that on the personal return?… read more
Carter McBride
Carter McBride
LLM
441 satisfied customers
A Non-US resident is the sole shareholder of a U.S Corp. The
A Non-US resident is the sole shareholder of a U.S Corp. The U.S Corp is the owner a Real Estate Property in NY City. The shareholder of the U.S Corp is affray that if she passes away, there will be a… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
For a CPA about tax rules on pass through entities and
For a CPA about tax rules on pass through entities and partnerships: I have a pass through entity - an LLP (Limited Liability Partnership) with 2 partners. The entity had operated for years as a sole … read more
Carter McBride
Carter McBride
LLM
441 satisfied customers
S-Corp Tax Question. Non-taxable distributions from S-Corp
non-taxable distributions from S-Corp to 100% shareholder. reducing basis in cost basis of stock, avoiding income tax to s-corp shareholder … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,311 satisfied customers
I am considering filing as an Non-Profit for the tax
i am considering filing as an Non-Profit for the tax advantage but do not know that it would work for me. I am just using this as a tax shelter as I will be owing lots more money in taxes as a single … read more
Robin D.
Robin D.
Senior Tax Advisor 4
Vocational, Technical or Trade School
14,120 satisfied customers
Do you know non profit tax law? California. The 501(c) 3 has
Do you know non profit tax law? JA: Can you tell me where the nonprofit is registered? Customer: California JA: Has anything been officially filed? If so, what? Customer: The 501(c) 3 has existed sinc… read more
Lane
Lane
JD, CFP, MBA, CRPS
13,482 satisfied customers
My brother in-law is a non US citizen, non-resident. He
Second opinion] My brother in-law is a non US citizen, non-resident. He would like to gift my wife and adult children $100K each. He would like to use money he has invested in the US. Would he have to… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,311 satisfied customers
My brother in-law is a non US citizen, non-resident. He
My brother in-law is a non US citizen, non-resident. He would like to gift my wife and adult children $100K each. He would like to use money he has invested in the US. Would he have to file a gift (fo… read more
Barbara
Barbara
Enrolled Agent, Paralegal
4,058 satisfied customers
Do you have knowledge on tax laws regarding non profit
Do you have knowledge on tax laws regarding non profit donations and so forth? … read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,311 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x