I am looking for guidance regarding S Corp Equity accounts (with two equal 50% 50% shareholders). How are they maintained in general?
One of my Shareholders left the company in March 2022; so he stopped taking the distributions in march; What do you think how should I account for the Equity accounts so that at the year-end contributions for both of them are equal? What's the way out?
but as I understand it, his equity stopped when he left, so the requirement for matching investment stops then too. After March he should not have an equity account, unless he is just a shareholder and not working in the corp.
Again, get with a tax accountant for the best results
Agreed with @Rustler . I will just add that when an S-corp shareholder exits the company, they need to be bought out. Therefore, it depends on what was negotiated for their shares when they left the corporation. Once they are no longer a shareholder, you should not make any further distributions to them, it should have been negotiated at the time of their departure.
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