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Hello. Looking for help. My father and I are 50/50 partners each holding the same number of shares in our family owned S Corp. Within the last few months he has gone blind and is no longer able to help me in the business. He wants to transfer his 50% of the S Corp shares over to me and make me the 100% shareholder in our small family business. Is this against the rules? I see alot about transferring can possibly lead to the S Corp status being revoked. I am in GA and not sure what would have to take place with the Secretary of State here and IRS to show the transfer of shares as well.
1) you really need to speak with a competent attorney
2) doing several transfers over the course of several years will probably work better.
2a) you may even be able to qualify under tax exempt gifting...
or gifting you the money needed to buy him out
In general you should inherit the stock from your father. The stock will get a steep up in basis and could save you capital gains taxes when you sell. Note estate and gift taxes may change this year.
The transfer of the stock to you will result in a gift tax. You will probably only have to file the gift tax form with no tax due.
Sub S are complicated but going from two shareholders to one should not cause you to lose your S status.
Their maybe income tax problems I do not know about. Note that you and your father are splitting the annual income. If you own all the stock you will be in a higher tax bracket. Might be better to let your father pay the taxes on the earnings and gift what is left over to you each year.
If after meeting with the CPA you can decide if an attorney is necessary. From what you said probably not.
In general I would not be in favor of transferring ownership to you unless your father has no need of the income
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