Transferring S Corp Shares

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  • JustChecking
    Junior Member
    • Sep 2008
    • 5
    #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?
    Tags: None
    • Bees Knees
      Senior Member
      • May 2005
      • 5456
      #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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        • JustChecking
          Junior Member
          • Sep 2008
          • 5
          #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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