Prentice Hall S Federal Taxation Test B

They can have as many shareholders as they want to, there is no limit and they can raise large sums of capital.

both a and b (Yes.  The corporate structure provides for limited liability and ease of transferring ownership.)

4. Benefits of choosing to be S Corporation. According to Sec. 1361 and Reg.Sec. 1.1361-1, if Paula and Mary both consent to the special election made by the corporation, the corporation could be a S corporation so that in the first two years, Paula and Mary could use the loss to offset their income from other sources. If necessary, they could revoke the decision, turning the corporation back into C Corporation.

When you buy stock you are purchasing a part of a corporation. The ownership of the corporation is divided into shares of common

Though Bob and Ann are going to provide lump sum gifts of $1,000,000 to each of their children and grandchildren, it would behoove them to reconsider and plan a more effective solution than the gifts being taxed immediately at disbursement if they choose to sell the investment gifts. Presuming that the common stocks are paying out regular dividends the beneficiaries would find more value in receiving their inheritance in stages and retaining the stock to avoid possible capital gains tax. Therefore, individual trusts for each may

The first issue I am going to address is the ownership of different classes of stocks and the implications

It is a maxim of Equity that Equity will not assist a volunteer and will not perfect and imperfect gift; nonetheless, one must consider the every effort rule. In Re Rose, it was established that If the donor has done everything necessary for her to transfer title, the trust will not fail simply because the donor dies before the process of transfer is finalized. In this light, if the only outstanding task is to be carried out by a third party, then the settlor has taken all the steps that he personally needs to take. In Sally’s case, she sent her share certificate with a signed Stock Transfer Form to Dopey Dave and orally told him to sort it out. If anything, the only missing element is the registration of Hector as a new owner in the company’s register. Lastly, one can also mention Pennington v Waine , which widened the every effort test by discussing unconscionability. Thus, it could be argued that it would be unconscionable after being informed by Sally of his interest in the shares to then be denied of them. On the balance of the law overall it seems that the shares in Megabucks Ltd will not form part of the

(a) owns, directly or indirectly, not less than 10 per cent of the issued shares of any class of the capital stock of the employer or of any other corporation that is related to the employer,

Meg can actually use trusts in transferring “the remainder interest” of the life estate using three options: Grantor Retained Income Trusts (GRITs), Grantor Retained Annuity Trusts (GRATs) and Grantor Retained Unitrusts (GRUTs). One advantage is in the form of tax savings. However, the disadvantage lies on the notion that upon the death of the grantor before the expiration of the income interest, the asset value will be included in the “grantor’s gross estate (as more specifically related under Code Sec.2036(a) ( as cited in “Gift and Estate Tax Planning” 14-10). For the case of Meg and Maynard, GRUT can be preferable and more relevant, such that the investment portfolio can be associated as speculative and with high stock

The second class, 'Stock Shares Inheritance Group. ' They will not participate in management, but they are already major shareholders.

Any amount over and above this minimum threshold attracts a CGT at the rate of 40%. Evaluation of the inheritance is inclusive of all the assets (including the assets that are held in trusts), including but not limited to, money, property(ies), any gifts that were given during the period of seven years prior to the death, gifts to trusts or companies over the lifetime (some exceptions are applicable to this particular category).

Other smaller stockholders are not be able to collectively overrule the founder on company decisions

On the other hand, a tax-free reorganization may be possible if the Target is a limited liability company (LLC) that previously elected to be treated as a corporation for tax purposes and the election was not selected pursuant to a plan of reorganization. Similarly, if the Target is a “S” corporation, a tax-free reorganization may be available.

Companies Act 1993 section 84 requires every company to have at least one shareholder and at least one share . A common liability to shareholders is that they have an obligation to pay the amount that is being owed in his or her shares if the company goes into liquidation. This liability is for the shareholder of the current and the prior shareholder. In Section 96 of the Companies Act 1993 it states that a shareholder is a person’s name who is entered in the company’s share register as being the holder at that time of one or more shares in the company and section 51 states that shares are considered issued once the holders name if entered in to the share register. Tryrion Holdings Ltd v Claydon states in order to be a shareholder, the holder needs to be registered into the share register. In this case Tyrion is not listed in the shareholder as there was no share register known and any direct evidence of a share register existing. Neich v Roseka Ltd states that according to

At the time the licit requisite for incorporation was that at least seven persons subscribe as members or partners of the organization i.e. as shareholders. And Mr Salomon was managing director. Mr Salomon possessed 20,001 of the company 's 20,007 shares - the remaining six were shared individually between the other six shareholders (wife, daughter and four sons).