S Corporation (Taxes)

I am a 50% passive owner and corporate officer of a S Corporation which has returned very little profit over 20 years. Currently, I am reporting a small income from the Corporation I have not received. I no longer want to be involved with a business, for which I receive no benefits and end up with a tax liability for income I never received.

I'm not getting much help from others involved, and it seems difficult to just give away a losing investment, since nobody wants it.

How can I get rid of a losing S Corporation investment, and get my name off the books, so I don't have to pay more taxes on income I never receive. I don't want to pursue collecting income due, I just want to get rid of the whole thing.

Thanks,

-Bill

Reply to
Bill Bowden
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You have to find a buyer of your stock. There might be a special rule for disposing of worthless stock.

Even though the corporation made some profit over the years and you paid taxes on it, but didn't see any of that money, the profit that the corporation made is added to your cost basis (based on the number of shares), so you will have a loss even if you sold the shares for the same price you bought them at. Generally you can get all the info you need to track your cost basis from the K-1 over the years.

As a shareholder, you should be able to nominate a new board of directors -- maybe someone interested in liquidating the company.

Reply to
removeps-groups

Hit the Send button too soon. Maybe you can donate the shares to a 501 (c)(3) charity or the government.

Reply to
removeps-groups

"Bill Bowden" wrote

I'd start by making an offer to the other shareholders to buy you out, for a dollar or something like that. That gets you off the hook from that point forward.

There may be limits on what else you could do with your shares set by the corporate documents. Often times limits are placed on shares in closely held companies. So look into that before you do anything else.

Reply to
paulthomascpa

Being a substantial owner of the corporation may well give you rights of partition. In other words you can force the sale of the entire corporation, rather than just your portion. In that case you are more likely to end up with more money if the business is actually profitable.

Since you may have to go to court to do if the other shareholders resist, it might be worth also suing for an accounting. You may have been short-changed over the years, and that would allow for you to receive what you should have.

Check with a local business lawyer to see whether you can do that under the circumstances.

Reply to
Stuart A. Bronstein

I've just got to ask, how can one be a 50% "passive owner" yet still be a corporate officer? You've just as much say so in how the corporation operates and pays distributions as the other 50%.

ChEAR$, Harlan Lunsford, EA n LA

Reply to
HLunsford

The business is family owned with problems of dealing with relatives, if you know how that goes. You can't fire family members, or make demands, all you can do is go away if there is any way out.

It's an ugly situation where anyone challenged simply defends by pointing to other benefits received such as property taxes paid on jointly held property, and other little details like that. But it still adds up to a worthless investment that requires a CPA to figure out.

-Bill

Reply to
Bill Bowden

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Well, Christmas is coming. Perhaps you could just give your shares in the corporation to the other family member shareholders as a present?

Of course, this opens another can of worms, namely valuation of the shares to determine if there would be any gift tax issues in giving away your shares.

Reply to
Tom Russ

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