mircpa Posted February 22, 2008 Report Posted February 22, 2008 Have a client who has an S corp A with 2 shareholders, with client being one of them, total rev of 125k, net 80k, the issue here is one shareholder took his share of k1 income checks in one of his other S corp B's name, my question can i issue k1 in this S corp B's name ? My first thought is no k1 in corp's name, can somebody suggest any strategies to handle this situation. Quote
jainen Posted February 22, 2008 Report Posted February 22, 2008 >>Have a client who has an S corp<< No you don't. Your client has a C-corp. >>can i issue k1 in this S corp B's name?<< No. You should issue a 1099-DIV. Quote
mircpa Posted February 22, 2008 Author Report Posted February 22, 2008 >>Have a client who has an S corp<< No you don't. Your client has a C-corp. >>can i issue k1 in this S corp B's name?<< No. You should issue a 1099-DIV. issue a 1099-DIV ? I think i haven't explained the situation clearly. S corp (xxx) has two shareholders, one share holder took checks as part of k1 income on another of his S corp's name (yyy). Quote
RoyDaleOne Posted February 22, 2008 Report Posted February 22, 2008 My comment is are you saying One S Corp issued checks to another Corp (S or C really doesn't yet or maybe never), and the S Corp that issued checks are treating them as distributions to one of the S Corp stockholders. If so I don't see a problem. If the S Corp is treating them in a different manner, you have a problem. The S Corp who is receiving the checks should treat them as an amopunt paid for stock or as a loan from shareholder. Quote
Lion EA Posted February 22, 2008 Report Posted February 22, 2008 Can an S Corp be a shareholder in/receive K-1 income from an S Corp? Quote
mircpa Posted February 22, 2008 Author Report Posted February 22, 2008 Can an S Corp be a shareholder in/receive K-1 income from an S Corp? If somebody could answer lion's question, i would get my answer too Quote
jainen Posted February 22, 2008 Report Posted February 22, 2008 >>If somebody could answer lion's question, i would get my answer too<< Here's your answer to the question, "Can an S Corp be a shareholder in/receive K-1 income from an S Corp?" There is nothing to prevent an S-corp from distributing profits to another S-corp. However, doing so automatically terminates S status, which is the situation described in the original post. Since it happened last year, there is no honest way to correct it now. Prepare two short year returns--one for the S-corp prior to the distribution, and one for the successor C-corp. Quote
mircpa Posted February 22, 2008 Author Report Posted February 22, 2008 jainen thanks, and to all who responded Quote
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