hlunsford[at]bellsouth.net says...
- quote -

I've dealt with clients that took the term "election"
literally. As in "All those in favor of being an S-Corp,
raise your right hand." One of them was so naive about
running a business, that when we were preparing 2nd
extensions, my boss suggested "Some people may consider him
an airhead, but he's so far off this planet there ain't no
air up there."

Gary

--
You can probably X figure out X which letters to X delete to
derive my email address X.

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BRaskinCPA wrote:

- quote -

Did I miss something? Why would the corporation issue a 1099 to
a partial or even full year shareholder?

I sure hope the OP will secure the services of EITHER an Enrolled Agent
(EA) or a Certified Public Accountant (CPA) for qualified help. (grin)

ChEAr$,
Harlan Lunsford, EA from GA

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Sandy Wing wrote:

- quote -

First off, I hope you'll seek the help of competent tax
professional, either an Enrolled AGent (EA) or a CPA who
will help you figure things out when the tax return is filed
by next March 15th.

Whether or not you pay dividends to shareholders doesn't
matter. Each shareholder is taxed on his own tax return
according to his distributive share OF the profits, whether
retained by the corporation or not. And in figuring how
much will be uncle Joe's share, there is a pro rated days
formula that will be used to ensure fairness.

If you have profits therefore, and to be fair to all
concerned, and of course given the fact there IS enough
cash, pay out dividends (actually we call them
distributions) according to each one's share, to include
the actual "share days' that uncle Joe holds his stock.

that is why you need advance pro help before the end of the
year from either a CPA or an EA, so that March 15th won't
sneak up on you.

BTW, I'm hoping you're right about being an S corporation.
Many times, well, more than many times, people think the
attorney took care of all that, only to come to find out no
S corporation election (form 2553) was ever filed with the
IRS.

ChEAr$,
Harlan Lunsford, EA n LA

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- quote -

How was the income given "him"? If it was by check, then it
is a deduction by the corp and he would report it on his
1040. The corp would issue a 1099 to him.

Like I said previously, obtain the services of a CPA to
properly effect the actions that you have laid out in your
post. This is not for the uniformed or unqualified.

Bruce Raskin, CPA
Small Business and Individual Tax and Accounting Services

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- quote -

What dividends??? Income/Loss is passed on to shareholders,
depending on their claim to it (basis). Schedule K-1 (Form
1120 S) is used to inform shareholders what was their
income/loss and where, on their personal return, they are to
report.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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This year i started a S-Corp and my parents own 50% and i
own 50% of the company. However, I wish to give 1/4 of the
company away and my parents wish to give 25% of the company
and I wish to give 25% of the company to my uncle. We made
profits this year, but we have not issued our any dividends
to the shareholders (my parents and myself). What tax
implication are there? and what do I have to file with the
IRS? Also, for revenue that were derived before shares were
given to him, will he be paying taxes on those or would we
stil pay the full taxes? since we issue dividends at the end
of the year and never during the year.

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