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Hi Jack - It's a stock sale to an individual. Not an asset sale. He started the company from scratch and did not buy it from anyone else. He did not contribute any fixed assets to the corporation. There are no loans between him and the corporation. Thanks for your response. I'm pretty sure this is as straightforward as it seems for this tiny and uncomplicated company. I will double check for outside items that will increase or decrease that $15,000 basis. He was talking about an installment agreement with the buyer (I know how to handle that), and I'll want to check Sec 1202 and do some other things. Just needed a small push in the right direction.

Did he actually sell stock to an individual or company or did he sell assets? $15,000 appears to be his inside tax basis but his personal outside basis is what counts. As an example he could have bought the stock from someone else that had the $15,000 basis and paid $85,000 for the stock which would be his 1040 basis. There could be a loan to the corp from him that would increase basis. You have to find out more from him.

This is for Abby Normal....

"Abby Something" One of the funniest lines ever.

I understand why you are questioning this - it is almost NEVER this straightforward.

Good to know we're in good company, all a little weird, which makes us all normal.

We've installed solid state drives in all of our computers, recently, and today we installed a new gigabit router and a gigabit business class switch. Already opening ATX client list on a workstation is faster, and, of course, the SSDs make the computer faster than they were when they were brand new. Next, we're going to rewire the entire office with latest Ethernet cable. The cable we have now is almost 20 years old and some of the ends are starting to crumble a bit. The 500 GB SSDs were only 145 each, the router was 90 and the switch was 20 after a 10 dollar rebate. The wiring will probably be the biggest expense.

My favorite!!

My initial thought was that I want to come work in your office. But then I said, "wait a minute". ATX is already fast enough on my system. Any faster would be wasted speed. You see, I think me and my system have come to a point of complete correlation. As I have slowed down, the system has slowed down less. And I feel like we are right now at that point where the x line intersects the y line. Life is good. Any faster and I would not be able to keep up. But good for you. Hope that re-wire does not become troublesome. I had my office hard wired when I built the office 15 years ago and have never given a thought to replacing the Ethernet cables. I haven't noticed any of that crumbling yet. But since you pointed it out, I guess I will now have to keep watch. All of our cables are in a controlled air environment in the basement. Don't know if that would make any difference.

I like you Catherine. You're weird like me.

Did you run the personal 2015 tax calculations and 2016 projections related to those various scenarios? Which one works out better? What stands out is that if this is a typical year for the S corp, it has significant ordinary income, distributions of almost that same amount, and relatively low shareholder salary in comparison. Have you considered that the salary may be considered unreasonably low and should possibly be raised? Besides the reasonable comp issue and even though it will mean higher payroll taxes, it would be wise to increase the salary so that earnings reported to social security are higher and increase benefits at retirement. I had a client that refused to do this for many years, and then the year before he was ready to sign up for his benefits he asked me how he could impact those figures. Sorry Charlie, too late now.