Corporation - Minutes

[peggysioux]

My question is not tax related, but was hoping others have dealt with this situation and could enlighten me - I have a client who is a S-Corp and has banked with with same bank since they incorporated in 2004 and has not opened any new accounts with the bank recently. Bank is now asking for corporate minutes. Do any of you know why the bank would ask for this information?

[Lion]

Ask the bank

Ask the bank. Maybe to make sure the people on the signature card have the authority to sign for the company. Bank laws have tightened also, not just tax laws. They have to know the identity of their clients.

[DaveO]

Usually they just want a corporate resolution which they often provide as a fill in the blank form. I agree, ask the bank.

[JON]

Years

ago they used to ask for corporate resolutions, but I have not heard of that recently. I have a tough time convincing my corporate clients to even keep minutes. I wish they would be better.

[ChEAr$]

My question is not tax related, but was hoping others have dealt with this situation and could enlighten me - I have a client who is a S-Corp and has banked with with same bank since they incorporated in 2004 and has not opened any new accounts with the bank recently. Bank is now asking for corporate minutes. Do any of you know why the bank would ask for this information?

Which set of minutes is the bank asking for? Minutes of the board of directors' meetings or of the annual stockholders' meeting?
There is a difference, you know.

[Snaggletooth]

Can be a conflict

Glad this topic came up. Right now working with a C corp where I prepare the tax return but a CPA friend of mine prepares audited financials.

I reported a reduction in Retained Earnings because of rather obvious constructive dividends, and the owner agrees this is right and proper. IRS never forced the issue, it was me who insisted on constructive dividend treatment.

The CPA, however, is not reducing Retained Earnings because the so-called "dividends" were never declared and there is no corporate resolution. Owner never bothered to do it.

If neither one of us backs away from our position, I think the CPA GAAP treatment "trumps" the tax treatment for financial purposes. I would have to carry a book-to-tax adjustment on the 1120, Sch L balance sheet.

Not pretty.

[ChEAr$]

Glad this topic came up. Right now working with a C corp where I prepare the tax return but a CPA friend of mine prepares audited financials.

I reported a reduction in Retained Earnings because of rather obvious constructive dividends, and the owner agrees this is right and proper. IRS never forced the issue, it was me who insisted on constructive dividend treatment.

The CPA, however, is not reducing Retained Earnings because the so-called "dividends" were never declared and there is no corporate resolution. Owner never bothered to do it.

If neither one of us backs away from our position, I think the CPA GAAP treatment "trumps" the tax treatment for financial purposes. I would have to carry a book-to-tax adjustment on the 1120, Sch L balance sheet.

Not pretty.

This is a time for the board of directors to quickly meet and ratify the "payment" of dividends and record such action in it's minutes. There is no law that I know of that says dividends must be prospectively declared.

Your position is sound from a tax point of view.