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An S Corp hires "UBest Co" to provide services as outlined in an agreement and statement of work. The agreement states that UBest will receive $10,000 cash compensation and 10 shares in the S Corp. The agreement does not specify the value of the shares, but the owner says they are worth $10,000.
1. Assuming the owner's opinion of $10k value is correct, how is the $10k of income reported to UBest? Box 10 on the K-1?
2. Do you take the owner's word for it regarding the value of shares or does it have to be in writing?
Thanks.
1. Assuming the owner's opinion of $10k value is correct, how is the $10k of income reported to UBest? Box 10 on the K-1?
2. Do you take the owner's word for it regarding the value of shares or does it have to be in writing?
Thanks.