Disproportionate liquidating distributions Slave webcam chat

In a private letter ruling (PLR) issued back in May of 1995, an S Corporation had a “misunderstanding of the regulations” regarding S Corporations and had made disproportionate distributions to some shareholders over others.

The S Corporation intended “…to make a distribution to its shareholders to equalize the cumulative amount of per share distributions, including interest, to correct for the distributions made…” during 1995.

TJ Engineering has been profitable for a number of years and has approximately

TJ Engineering has been profitable for a number of years and has approximately $1,000,000 of retained earnings that can be distributed.

Tom and Jeff wonder whether they can make a cash distribution of $125,000 to Tom, but no distribution at all to Jeff, leaving the remaining retained earnings available to the business and thus satisfying the desires of both shareholders.

So based on this example, the question really is whether an S Corporation can make distributions to select shareholders that are disproportionate to the shareholders’ ownership interest.

The restriction relates to how businesses can be qualified to be treated as an S Corporation in the first place.

These rules are found in Internal Revenue Code Section 1361.

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TJ Engineering has been profitable for a number of years and has approximately $1,000,000 of retained earnings that can be distributed.Tom and Jeff wonder whether they can make a cash distribution of $125,000 to Tom, but no distribution at all to Jeff, leaving the remaining retained earnings available to the business and thus satisfying the desires of both shareholders.So based on this example, the question really is whether an S Corporation can make distributions to select shareholders that are disproportionate to the shareholders’ ownership interest.The restriction relates to how businesses can be qualified to be treated as an S Corporation in the first place.These rules are found in Internal Revenue Code Section 1361.

,000,000 of retained earnings that can be distributed.

Tom and Jeff wonder whether they can make a cash distribution of 5,000 to Tom, but no distribution at all to Jeff, leaving the remaining retained earnings available to the business and thus satisfying the desires of both shareholders.

So based on this example, the question really is whether an S Corporation can make distributions to select shareholders that are disproportionate to the shareholders’ ownership interest.

The restriction relates to how businesses can be qualified to be treated as an S Corporation in the first place.

These rules are found in Internal Revenue Code Section 1361.

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