s corp buying back its own stock

[KEYWEST_RICKS]

i say no on this but lets see if i can get any agreement........... have someone trying to convince me that if the scorp buys back its stock and holds treas stock that the s election is terminated.

due to an inelig shareholder.

i say that the shareholder rules only apply to shares issued and outstanding.

i understand that care must be taken to ensure you do not have a second class of stock....... but i think an scorp can own its own stock... yes???

 

can i get an amen on that or am i out in left field?

 

jeff

[PapaJoe]

I had an S-Corp client do that about 10 years ago. The attorneys who did all the paperwork (and who were well versed in taxes) had no problem with the corporation holding treasury stock. I don't have a problem with it either.

[Lee B]

Just because the corporation is holding treasury stock that it purchased does nothing to create a second class of stock.

[rfassett]

Agreed - this does not create a second class of stock. The second class of stock issue is only pertinent to outstanding shares.

 

[kcjenkins]

Amen.