Proprietorship to SCorp

[Super Mom]

If a business changes from a proprietorship to an S-Corp, is there any special tax consequences of the assets like the building and equipment, or does that all just go into the basis for that shareholder who was the proprietor? Or is that value carried over and split between the shareholders?

Forgive my ignorance, not researched yet!

[dsi]

Research sec 351.

[ChEAr$]

More research is needed

If a business changes from a proprietorship to an S-Corp, is there any special tax consequences of the assets like the building and equipment, or does that all just go into the basis for that shareholder who was the proprietor? Or is that value carried over and split between the shareholders?

Forgive my ignorance, not researched yet!

methinks.

When a corporation is formed, the shareholders each buy a number of shares and have to pay for those shares. For your shareholder who was not the proprietor before, he must ante up $ for his shares.

For the proprietor, make sure that the minutes of the organization meeting authorize the corporation to purchase any assets he used before at fair market value. Very important.
Then, to pay for that value, he may receive his "quota" of common stock at value with the balance in the form of a stockholder loan to the corporation which must be repaid with
interest.

[abctax]

Proprietorship to SCorp

And think seriously about transferring a 'building' into a corporation. It is genereally not a good idea to have real estate in a corporation, even an S Corp.

[Bees Knees]

If a business changes from a proprietorship to an S-Corp, is there any special tax consequences of the assets like the building and equipment, or does that all just go into the basis for that shareholder who was the proprietor? Or is that value carried over and split between the shareholders?

Forgive my ignorance, not researched yet!

You should read "Capital Contributions" starting on page 18-5 of the Deluxe Edition or SB2-5 of the Small Business Edition. It explains the tax issues involved with transferring cash and property into a corporation in exchange for stock in that corporation.