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Transferring S Corp Shares

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    #1

    Transferring S Corp Shares

    How should this be handled?

    A two member LLC is being taxed as a S Corp. One of the members wants to leave the business - they are a lawn maintenance company. That member only wants to leave with one mower. That member has received wages and should receive 1/2 of the profit/loss to date. How should this entire transaction be booked?
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    #2
    If there is enough cash or assets inside the corporation to pay off the one member, treat it as a stock redemption. Debit Treasury Stock (which is a negative to the equity accounts) and Credit Cash or whatever other asset(s) (the mower) are used to buy his/her shares of stock.

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      #3
      Does the partner receive a 1099Div in regards to the stock? Both individuals contributed $100 to the business. Also, the business may NOT have enough cash to pay him off completely. What to do?

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