my client recently converted from llc to c corp. I have some questions as to how the conversion impact their initial 1120.
1. so, they basically shift all the balance sheet items from old partnership to new c corp. including fixed assets, inventory, liabilities and equity. each of the shareholder get 1000000 shares.
My questions are
1. the initial equity contributions, I assume should be the ending capital account for each of the partners. (or Am I wrong here)
the two partners did not have same ending capital account balance. but since they got the same number of shares for the new c corp., is this normal? should I simply record the common stock using different additional paid in capital amount to catch up the difference? OR should I suggest them to shift some fund between them to make each one contribute the same amount toward shareholding?
2. each of the shareholder contributed more fund after the c corp was established with each of them contributing different amount. should I record the additional funding as additional paid in capital to their original number of shares, or should I suggest them to use the fund to buy more shares of the company as they still have about 6million authorized shares not issued yet.
3. any potential impact of above issues to the filing of their initial 1120 at year end of 2019?
Thank you so much!