schirallicpa Posted February 24 Report Posted February 24 Lawyer advised elderly stockholder of small S-corp to sell his stock back to the corporation. I am not sure how much the corporation should pay for this stock? How do I come up with that amount? Quote
Lee B Posted February 24 Report Posted February 24 Depends on what kind of assets the corporation has and what the overall balance sheet looks like. In some cases, this situation might require an appraisal. I wonder why the lawyer advised your client to do so, since there won't be any step up in basis this way. Quote
schirallicpa Posted February 24 Author Report Posted February 24 He's headed to a nursing home within the next few months and the lawyer wanted to eliminate the possibility of the business getting hit with his bill. Quote
Lee B Posted February 24 Report Posted February 24 3 minutes ago, schirallicpa said: He's headed to a nursing home within the next few months and the lawyer wanted to eliminate the possibility of the business getting hit with his bill. If it's an S Corp how would the business get hit with any taxes? The stock would be passed on to his estate or his heirs with a step up in basis I really curious as what this lawyer's reasons are??? 1 Quote
kathyc2 Posted February 24 Report Posted February 24 43 minutes ago, schirallicpa said: He's headed to a nursing home within the next few months and the lawyer wanted to eliminate the possibility of the business getting hit with his bill. Is it to qualify for Medicaid? If so, you are exposing yourself to liability if you are involved in valuation. Quote
Lee B Posted February 24 Report Posted February 24 21 minutes ago, kathyc2 said: Is it to qualify for Medicaid? If so, you are exposing yourself to liability if you are involved in valuation. Most states have a 5 year lookback analysis so that won't work. 1 Quote
kathyc2 Posted February 24 Report Posted February 24 6 minutes ago, Lee B said: Most states have a 5 year lookback analysis so that won't work. That is exactly where the liability would come from. If S/H runs out of money to pay for care, they can certainly look back to see if shares were properly valued. Quote
schirallicpa Posted February 24 Author Report Posted February 24 (I don't like this attorney. And this client doesn't normally use this guy. But after he ended up in their parking lot with a trailer wedged under his truck and they helped him out, he offered his free advice. So they went ahead and wrote up the motion in their corp books and figured that was good. The attorney won't give any financial advice. ) 2 Quote
JohnH Posted March 5 Report Posted March 5 Sounds like the attorney's advice was worth what the client paid for it (or maybe less). 2 Quote
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