Corporate Tax Planning Using Stock Redemptions

Description

The use of stock redemptions to change the ownership of a corporation is common to buy out existing owners, to shift ownership to key employees and to shift ownership to the younger generation of a family-owned corporation. This course reveiws relevant federal income tax law and planning strategies to minimize tax cost. It focuses on how redemptions of the stock of an S corporation produce unique and potentially desirable tax results. It also describes the complex rules that apply to sales of stock to related corporations, which can be treated as redemption (IRC 304). The consequences of redemption for the redeeming corporation are explained and illustrated in this course.  

Highlights

• Description of the general approach to the tax treatment of the shareholder whose stock is redeemed
• Substantially disproportionate redemptions
• Redemptions terminating the shareholders interest in the corporation
• Redemptions not essentially equivalent to a dividend
• Partial liquidation
• Redemptions to pay estate tax
• Constructive ownership and redemptions
• Redemption of the stock of an S corporation
• Sales of stock to a related corporation treated as a redemption (IRC 304)
• Redemptions to buy out existing owner or owner group
• Using redemptions to shift ownership to key employees
• Shifting ownership of family-owned corporation using redemption
• Tax consequences of redemption for the redeeming corporation

Objectives

• Describe tax planning opportunities available related to redemption of stock of corporation.
• Understand the tax law determining the shareholder tax consequences of stock redemptions.
• Describe and illustrate the application the special rules applicable to redemptions of the stock of an S corporation.
• Understand how to use stock redemptions to shift ownership to key employees and to younger family members in a family-owned corporation.
• Review how to use redemptions to buy out and shareholder or shareholder group.
• Understand the tax law related to using stock redemptions to fund the payment of estate tax.
• Describe and illustrate the tax consequences of the redeeming corporation.

Designed For

CPAs and attorneys who have at least two years of experience advising owners of privately held businesses. Financial management and owners of privately held corporate businesses. Employees of the IRS and FTB.