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Posted by kkallmes on May 25, 2007, 10:50 pm
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I live in Ohio but held stock in a company in Massachusetts
during 2005. I paid $ 2000 in taxes for taxes due that year
but have never received a distribution from the S-Corp to
cover this payment. Is there anything I can do?
Thanks
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Posted by Stuart A. Bronstein on May 29, 2007, 10:44 pm
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kkallmes@gmail.com wrote:
> I live in Ohio but held stock in a company in Massachusetts
> during 2005. I paid $2000 in taxes for taxes due that year
> but have never received a distribution from the S-Corp to
> cover this payment. Is there anything I can do?
Get rid of one of the directors and put your own in there to
protect your interests.
Stu
<< ------------------------------------------------------- >>
<< 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. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
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<< Copyright (2006) - All rights reserved. >>
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Posted by James Lewis on May 29, 2007, 10:44 pm
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> I live in Ohio but held stock in a company in Massachusetts
> during 2005. I paid $ 2000 in taxes for taxes due that year
> but have never received a distribution from the S-Corp to
> cover this payment. Is there anything I can do?
Unless you own 50+% of the company, there's not much you can
do other than decide if the value of the company is
increasing enough to justify you paying taxes on its profit
for future years. Minority ownership in a business always
has this problem. If this is not even a publicly traded
stock you can readily sell, it's even less attractive to
most investors. If you decide you want to sell the stock and
find there is no ready buyer, a good lawyer can help you
"encourage" the company to buy the stock back or lose its S
status.
Mike
<< ------------------------------------------------------- >>
<< 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. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by cballard@tyyni.net on May 31, 2007, 12:58 am
Please log in for more thread options kkall...@gmail.com wrote:
> I live in Ohio but held stock in a company in Massachusetts
> during 2005. I paid $ 2000 in taxes for taxes due that year
> but have never received a distribution from the S-Corp to
> cover this payment. Is there anything I can do?
This is known as "phantom income," you get treated for tax
purposes as having income, but you don't receive any cash.
It is a potential issue with any partnership or S
corporation.
Most S corporations have a shareholder agreement that
provides for sahreholders to receive dividends every year to
cover the shareholders' tax liabilities. You might want to
take a look at the language of your agreement. If there is
a provision there that provides for distributions to
shareholders, there is also usually some language that
describes when these distributions will not be made.
Even if there is a shareholder agreement in place, the
distributions don't just happen automatically--the
corporation has to go through the formal mechanism of
declaring and paying a dividend. The board of directors of
the corporation is generally the group that has the power to
declare or not declare a dividend from a corporation. You
might check with someone on the board to find out what the
story is. If the corporation has been losing money or
doesn't have enough cash on hand to adequately service its
debt, state law might actually prohibit the board from
declaring a dividend.
--Chris
<< ------------------------------------------------------- >>
<< 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. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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Posted by Paul Thomas, CPA on May 31, 2007, 12:58 am
Please log in for more thread options > I live in Ohio but held stock in a company in Massachusetts
> during 2005. I paid $ 2000 in taxes for taxes due that year
> but have never received a distribution from the S-Corp to
> cover this payment. Is there anything I can do?
Talk to the Officers, Directors and other shareholders about
it. You can't force the company to make distributions, and
their cash flow may prohibit it at this time. Remember that
if any shareholder gets a distrtribution, they all must get
distributions in accordance with their shares.
--
Paul A. Thomas, CPA
Athens, Georgia
<< ------------------------------------------------------- >>
<< 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. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2006) - All rights reserved. >>
<< ------------------------------------------------------- >>
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