mircpa Posted February 22, 2008 Report Share Posted February 22, 2008 Have a client who has an S corp A with 2 shareholders, with client being one of them, total rev of 125k, net 80k, the issue here is one shareholder took his share of k1 income checks in one of his other S corp B's name, my question can i issue k1 in this S corp B's name ? My first thought is no k1 in corp's name, can somebody suggest any strategies to handle this situation. Quote Link to comment Share on other sites More sharing options...
jainen Posted February 22, 2008 Report Share Posted February 22, 2008 >>Have a client who has an S corp<< No you don't. Your client has a C-corp. >>can i issue k1 in this S corp B's name?<< No. You should issue a 1099-DIV. Quote Link to comment Share on other sites More sharing options...
mircpa Posted February 22, 2008 Author Report Share Posted February 22, 2008 >>Have a client who has an S corp<< No you don't. Your client has a C-corp. >>can i issue k1 in this S corp B's name?<< No. You should issue a 1099-DIV. issue a 1099-DIV ? I think i haven't explained the situation clearly. S corp (xxx) has two shareholders, one share holder took checks as part of k1 income on another of his S corp's name (yyy). Quote Link to comment Share on other sites More sharing options...
RoyDaleOne Posted February 22, 2008 Report Share Posted February 22, 2008 My comment is are you saying One S Corp issued checks to another Corp (S or C really doesn't yet or maybe never), and the S Corp that issued checks are treating them as distributions to one of the S Corp stockholders. If so I don't see a problem. If the S Corp is treating them in a different manner, you have a problem. The S Corp who is receiving the checks should treat them as an amopunt paid for stock or as a loan from shareholder. Quote Link to comment Share on other sites More sharing options...
Lion EA Posted February 22, 2008 Report Share Posted February 22, 2008 Can an S Corp be a shareholder in/receive K-1 income from an S Corp? Quote Link to comment Share on other sites More sharing options...
mircpa Posted February 22, 2008 Author Report Share Posted February 22, 2008 Can an S Corp be a shareholder in/receive K-1 income from an S Corp? If somebody could answer lion's question, i would get my answer too Quote Link to comment Share on other sites More sharing options...
jainen Posted February 22, 2008 Report Share Posted February 22, 2008 >>If somebody could answer lion's question, i would get my answer too<< Here's your answer to the question, "Can an S Corp be a shareholder in/receive K-1 income from an S Corp?" There is nothing to prevent an S-corp from distributing profits to another S-corp. However, doing so automatically terminates S status, which is the situation described in the original post. Since it happened last year, there is no honest way to correct it now. Prepare two short year returns--one for the S-corp prior to the distribution, and one for the successor C-corp. Quote Link to comment Share on other sites More sharing options...
mircpa Posted February 22, 2008 Author Report Share Posted February 22, 2008 jainen thanks, and to all who responded Quote Link to comment Share on other sites More sharing options...
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