Form 1120 Sch K Line 10: Is ZERO shareholders possible?

Technical topics regarding tax preparation.
#1
LMJ  
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Entity was formed with idea that sharehoders would be "recruited". The company forming the enity funded the formation and paid for expenses during the first year but never issued shares to itself, although the plan was to do so down the line. Instead these expenses were booked as a payable to that company. Can you actually file a Form 1120 in such a situaton and say there are no shareholders???
 

#2
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The company that formed the [subsidiary] entity is the shareholder --- it is the 100% shareholder.

As stated in Collateral Equities Trust v. Commr., 39 BTA 834 (1939):
* * * [N]o certificate of stock is necessary to attest the rights of the shareholders; such certificate, when issued, is merely an evidence or acknowledgment of the owner’s interest in the property of the corporation, but is not property itself. The issuance thereof is by no means essential to the creation of the relation of stockholder; one may be the owner of stock without any certificate to evidence the fact.


If the company that formed the entity wanted to, it could issue itself shares. This means it controls the entity and is the shareholder of the entity.
 

#3
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Ditto. Another way to say it is that the stockholders are the persons who have all the rights of ownership of the corporation. In this case the company forming the corporation has all of such rights. (Substance over form.)
Steve
 


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