Free chat sexy lezbo - Proportionate liquidating distribution

S distributes ,000 to A in the current year, but does not distribute ,000 to B until one year later.

In 1994, the S Corporation made equalizing distributions to compensate for the distributions made during the years 1987 through 1991.

Again, the IRS ruled here that because the corporation had only one class of stock with equal rights to distributions, in the end the distributions made had not adversely impacted the S status of the corporation.

So going back to our initial example, may we conclude that TJ Engineering may make the disproportionate distributions to satisfy the desires of both shareholders?

In short, yes, but only so long as corrective distributions are made afterwards, and so long as the disproportionate distributions are not made pursuant to any contract, shareholder agreement, or other binding document that would go so far as to suggest that shareholders have differing rights to any distributions from the S Corporation.

The disproportionate distributions were made during tax years 1987 through 1991.

The S Corporation then made proportional distributions beginning in 1992.

Tom and Jeff wonder whether they can make a cash distribution of 5,000 to Tom, but no distribution at all to Jeff, leaving the remaining retained earnings available to the business and thus satisfying the desires of both shareholders.

So based on this example, the question really is whether an S Corporation can make distributions to select shareholders that are disproportionate to the shareholders’ ownership interest.

Section 1361 requires that each business meet the following qualifications in order to be an S Corporation for federal tax purposes: Now, note that the business, in addition to being required to meet these requirements in order to become an S Corporation, must also continue to meet these requirements in order to continue as an S Corporation.

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