Stock Redemption Plans for S Corporations - Friend or Foe?
Numerous closely-held businesses operate a S corporations because of the many tax advantages this type of entity provides its owners/shareholders. Most notable is the pass-through of all items of income, credits and deductions to the individual shareholders. However, in the context of business succession planning, many business owners (and their advisors) are unaware of the advantages a stock redemption plan can provide, such as the ability for surviving shareholders to receive a full increase in cost basis. Many believe that the rules that apply to regular C corporations are the same as
S corporations. That’s not entirely true.
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