Can dividends be paid to only one shareholder??

[Booger]

My mind is not working this AM. If S Corp has 3 shareholders, can Corp pay dividends to only

1 and not the other 2?.

[Guest Evan S. Golar]

My mind is not working this AM. If S Corp has 3 shareholders, can Corp pay dividends to only

1 and not the other 2?.

No - because that would create 2 classes of stock that's in violation of being an S Corp.

[Booger]

Thanks, Evan. Now, forget about the S Corp. If a C Corp has only one class of stock o/standing,

and has 3 shareholders. In this scenario, can the Corp pay dividends to only one shareholder?

I seem to recall that if one stockholder (in the above scenario) receives a dividend, then all shareholders

have to, based upon their shares held.

[rfassett]

That taints the S-election by introducing a second class of stock. Distributions from an S-Corp have to be done ratably across the board.

[rfassett]

If the stock has the same rights then they have to be treated the same way. A C-Corp can have multiple classes of stock, but the stock itself will dictate what rights each class has.

[Booger]

Thanks for your responses.

[kcjenkins]

Every stockholder in the class must be treated the same.