ammending an irs 2553 (s corp)

[danconsta]

We have an S corp that we has aproved by the IRS a few
years back and have a few problems.

Here is what I know.
1. When my wife and I created the corp we said that the
corp is allowed to issue 1 million shares.

2. When we filled for the S corp we gave out to ourselfs 400
and 600 shares. (not the total 1 mil)

3. The K-1s were filled out with 100% of the profits going
to just one of us. Since we file jointly I did not see a
problem with that.

Now, we want to add some shareholders to the corporation.
How do we do that? Do we need to file an amendment to the
2553?

Thanks,
Dan

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[Harlan Lunsford]

We have an S corp that we has aproved by the IRS a few
years back and have a few problems.

Here is what I know.
1. When my wife and I created the corp we said that the
corp is allowed to issue 1 million shares.

2. When we filled for the S corp we gave out to ourselfs 400
and 600 shares. (not the total 1 mil)

3. The K-1s were filled out with 100% of the profits going
to just one of us. Since we file jointly I did not see a
problem with that.

The problem is that your respective schedules K-1's from the
corporation should have apportioned the profits in the 60/40
ratio. Probably not necessary to amend, since there's no
effect on your joint form 1040.

Now, we want to add some shareholders to the corporation.
How do we do that? Do we need to file an amendment to the
2553?

So, with 1 million shares authorized, and only 1,000
outstanding, the corporation still has a bunch of shares
which can be sold to new shareholders. You can either (a)
let the corporation sell additional shares to the new guys,
and/or (b) sell some of your and wife's shares.

Whatever you do, just remember the element of control. If
you and wife own less than 50% of the common stock, you lose
control.

As for the 2553, no such thing as an amendment. The
original election remains in effect until either (a) it is
terminated by the corporation, or (b) something occurs to
nullify it.

I would suggest you obtain the services of a local tax pro,
either an Enrolled Agent (EA) or Certified Public Accountant
(CPA) who is versed in the intricacies of S corporations.

ChEAr$,
Harlan Lunsford, EA n LA

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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2007) - All rights reserved. >>
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