Zorro1k Posted September 25, 2015 Posted September 25, 2015 Is it possible to classify partners who retire early as terminated so that they may receive a distribution under their plan if they are receiving s-corp distributions but no w-2 wages?
Jim Chad Posted September 25, 2015 Posted September 25, 2015 FWIW I think, yes. I'm interested in what others think.
Zorro1k Posted September 25, 2015 Author Posted September 25, 2015 That was my initial reaction. I did read on the IRS website that if a shareholder has the right to receive property then the s-corp must determine and report an appropriate and reasonable salary. If they are receiving a salary, they aren't terminated. Can a retired s-corp employee/shareholder continue to be a shareholder? I don't see a prohibition on that issue but if there is a requirement that a distribution correspond to wages, it makes me think that there is an issue.
BG5150 Posted September 29, 2015 Posted September 29, 2015 I thnk the crux of it is whether or not the person is performing services to the company. QKA, QPA, CPC, ERPATwo wrongs don't make a right, but three rights make a left.
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