Guest Rebecca Howell Posted February 17, 2001 Posted February 17, 2001 Upon termination of employment, stock granted under stock option plan was sold back to privately held S corp. Market value for sale of stock was determined by CPA firm as of 1/1/00. Upon receipt of K-1 for 2000, the tax basis of stock at 1/1/00 was substanially higher than market value determined by CPA firm. Was the stock undervalued for buy back by company?
BeckyMiller Posted February 19, 2001 Posted February 19, 2001 Not necessarily. As an S corporation, tax basis increases every year by any undistributed income. Market value is a function of the market. So the two items don't necessarily move in any kind of harmony.
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