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think this is income

Technical topics regarding tax preparation.
#1
zl28  
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Have a 3 person s-corp.

2 s/h want to leave.

Company has a negative net worth.

The 2 s/h who want to leave agree to pay the corp 20k each in order to depart as shareholders.

Don't think this is treasury stock bc the corp is not paying s/h for their stock.

Does that mean the 40k contributed is income to the corp?
 

#2
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28-Jul-2017 12:08pm
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North Country, USA
Seems like it shouldn't be income - a contribution to a corporation by the controlling shareholders should be tax-free under Section 351. The departing shareholders will potentially free up suspended losses (I assume).
 

#3
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646
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Chicago, IL
APIC?
 

#4
zl28  
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1101
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Location:
usa
cap contribution sound good - thank you - and that'll give them basis to take losses.
 


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