SCorp Minority Shareholder requesting copy of Tax Return

[ed_accountant]

Hi,

The majority shareholder of a corporate client had a dispute with his former partner, the minority shareholder. The dispute was settled in arbitration and the majority shareholder purchased all the shares of minority shareholder. The minority shareholder was a shareholder from 1/1 - 11/30. As of 12/31 the majority shareholder owned 100% of company.

Here's the problem and my question: The minority shareholder has requested from me a copy of the corporate tax return. My client refuses to give me permission to give him a copy. I have not reponded to the minority shareholder and would like to stay out of the new dispute.. I believe I am obligated to give only my client a copy of the tax return unless I have written client approval and copies of K-1s to shareholders.. Is that correct?

Thanks

[TAXBILLY]

I guess the question would be:

Is your client the majority shareholder or the corporation?

It seems that during the arbitration process the minority shasreholder would have asked for the copy before agreeing to a settlement.

You might want to ask the majority shareholder if his lawyer can put it in writing as to the legality of the request to protect yourself.

taxbilly

[OldJack]

>>As of 12/31 the majority shareholder owned 100% of company.<<

This would appear to be a request for a tax return of a previous year such as 2007. Since your client is in fact a corporation (who pays you), your obligation is to provide copies to the corporation. Since the current corporation officer has told you not to provide copies to anyone you would not be allowed to do so without a court order. I would simply tell the prior shareholder that his request should be directed to the corporation that you have provide copies to it.

[TAXBILLY]

Agree with Old Jack (which is nothing new :~) )

taxbilly

[jainen]

>>The minority shareholder has requested from me a copy of the corporate tax return<<

The shareholder can probably demand an accounting from the corporation to support the buyout price, although it's a bit late even for that. He certainly has no right to the whole tax return which contains information about periods when he was not a shareholder. I agree with the ever-wise OldJack.

[ed_accountant]

Thank you all for the responses..