S-Corp Shareholders Disagreement

[geekgirldany]

I need a little advice on what to do here as I have not encountered this situation before.

I've got an S-Corp where one shareholder left. There is now disagreements going on in regards to various transactions in the S-Corp.

Should I talk to the ex-shareholder about the S-Corp return?

I would go into more details but this may become a bad situation if not already. I feel I only need to deal with the existing S-Corp shareholder. If she wants me to talk to the other one then I would need to get a privacy release.

What do you all think?

[snowshine]

I'd saything along the lines of, "sorry, but if i cannot talk to both of you together I don't believe I can adequately prepare your return."

[Gretel]

I've got an S-Corp where one shareholder left. There is now disagreements going on in regards to various transactions in the S-Corp.

Should I talk to the ex-shareholder about the S-Corp return?

I only would talk to the other one in presence of the one you deal with, if this should be necessary.

As far as the Corporation tax returns goes, I think the 2nd S/H has all right to talk to you and you to him without conflict of interest - but I would not talk to the second one separately.

[geekgirldany]

So are you all saying that I should talk to both of them at the same time in regards to the S-Corp return? One has already made it clear that she would talk to me but not to the other shareholder.

I just don't want to get in the middle.

The return is already prepared and ready to go.

[Gretel]

see your e-mail

[geekgirldany]

got it thanks

[ChEAr$]

Is your client the majority shareholder? If so, the return is prepared on the basis
on information presented by same.

If the other shareholder is/was a minor shareholder, it's no skin off your nose.

The important point here is that a majority shareholder controls everything, NOT in his capacity
as a shareholder of course, but as president/chairman of board, whatever. Only an officer of the
corporation has authority to direct affairs of the corporation.

But if it was a 50/50 deal, I see your concern, cause you might not know who has control. Best to
get copies of last board of directors' meeting.

[geekgirldany]

Thanks so much for posting. Actually it was 55/45 with current shareholder being the majority.

I don't even think there have been minutes or meetings recorded.

[ChEAr$]

55/45 solves your problem. Deal only with mr 55.

[Nashville]

Cannot just "Leave"

Dany, a shareholder cannot just "leave." Of course, he may physically do so, or just simply fail to show up, but there has to be a disposition of his shares. If he does nothing, your state law probably determines what happens to his existing shares.

But "leaving" will be a financial event, with possible ramifications on the K-1.