"Sashaacct" <sashaacct[at]mindspring.com> wrote:

- quote -

I would think that options are not a second class of stock,
but you do have to watch out for the fact that an S
corporation may not have more than 75 shareholders.

Wayne Brasch, CPA, M. S. Taxation

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"Sashaacct" <sashaacct[at]mindspring.com> wrote:

- quote -

Actually they are pretty clear because options are not
stock. That's why those cites don't refer to options as a
second class of stock, because they aren't stock in the
first place.

--
David M. Woods, EA
Boston, MA 02109

Postings here are general information only and not to be
relied upon as advice.

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I am considering an S Corporation for my next company
structure. I want to be able to give my employees and
contractors stock options as payment for services, but am
concerned that may invalidate the S status. Are options
considered a second class of stock? The IRS and the section
of Fed Code of Regulations that deals with S (title 26,
1.1361) were not clear at all.

Any help will be greatly appreciated. Thanks!
Sasha

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