Treasury stock

[dhawkcpa]

Sub S corp buys back stock from one stockholder for 30K. Should this be reported on the K1 or on a 1099B or anywhere at all? Thanks, Dennis

[Edsel]

1099-b

If this was a registered transaction (and I would think so in order to be valid for Treasury Stock), then the individual should receive a 1099-B and report the sale on Sch D. If he is a 50% or more shareholder of the S company, he cannot report a loss because of being a related shareholder, but he must report a gain.

You have to wonder why this happened....

[Edsel]

Scratch Above Response

Sorry Hawk -- you were speaking of the corporation's own treasury stock, and I responded as if you were talking about T-bills.

I don't know that the corporation would be required to issue a 1099-B, because this is probably not a "registered" transaction of a public traded security. But if they chose to do so, there would not be anything wrong in so doing.

The same recognition of gain/nonrecognition of loss would apply. A strong incentive for the shareholder and corporation not to monkey around with hokey prices.

[ChEAr$]

Buying back common stock to be held in the treasury is not reportable by the corporation.

Only the former shareholder has reporting responsibility just like on any other securities transaction.

Not that it matters here, but the corporation may indeed have bought the stock to be held in the treasury, OR, and more common, it may have redeemed the stock.

[Gretel]

I am showing my ignorance here but something does not make sense to me that I noticed on a prior year tax return.

Common Stock $100,000
no other stock
Ret.Earnings $80,000
Treasury Stock $120,000

How can the treasury stock be more than the total of stock if it is supposed to reflect stock bought back or redeemed (by the way Harlan what is the difference between buying back stock and redeeming it?).

I am still confused about the 1099-B issue. If the stockholder gets his money back doesn't this need to be reported? I looked at the instructions but did not find my answer.

This is a single owner C Corporation for which I have been asked to to the tax return and I am not sure yet that I will be comfortable with it.

[dsi]

OP said it is an S-corp, not C.

[Gretel]

Sorry, I will post a separate thread. My question was related only to treasury stock and Harlan's response, not to the original post.