To all the shareholders of Ale and Grains, Inc., It is my pleasure to offer you my assessment and recommendation in regard to the condition that might affect tax concerns, especially the fact that Gustav and Heidi Lager, as individual owners of Ale and Grains, Inc., have recently obtained a divorce. In order to attain common grounds in regard to this matter, the following facts and assumptions are hereby presented:
Ale and Grains, Inc. is an S corporation, which means certain criteria must be met, such as: a domestic corporation; limited number of shareholders (100 counts); ownership of individuals, trusts and estates; disallowance of partnership and “non-resident,” “alien shareholders;” offerings of “one class of stocks;” and considered an “ineligible corporation” (“S Corporations,” 2015);
Gustav and Heidi Lager are married; they are two individual shareholders and operators of Ale and Grains;
The corporation has 100 qualified shareholders, including the individual shares of Gustav and Heidi Lager;
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Upon seeking the advice, Gustav and Heidi Lager instated the relevance of the “doctrine of substance over form” on the case, in which it prescribes no substantial or material changes on their individual tax returns nor the other shareholders of the company.
Based on the IRS, section 7701(o)(1), a transaction or condition has economic substance, under the following criteria: “(1) the transaction changes in a meaningful way (apart from
Federal income tax effects) the taxpayer’s economic position; and (2) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into
Ale and Grains, Inc. is an S corporation, which means certain criteria must be met, such as: a domestic corporation; limited number of shareholders (100 counts); ownership of individuals, trusts and estates; disallowance of partnership and “non-resident,” “alien shareholders;” offerings of “one class of stocks;” and considered an “ineligible corporation” (“S Corporations,” 2015);
Gustav and Heidi Lager are married; they are two individual shareholders and operators of Ale and Grains;
The corporation has 100 qualified shareholders, including the individual shares of Gustav and Heidi Lager;
…show more content…
Upon seeking the advice, Gustav and Heidi Lager instated the relevance of the “doctrine of substance over form” on the case, in which it prescribes no substantial or material changes on their individual tax returns nor the other shareholders of the company.
Based on the IRS, section 7701(o)(1), a transaction or condition has economic substance, under the following criteria: “(1) the transaction changes in a meaningful way (apart from
Federal income tax effects) the taxpayer’s economic position; and (2) the taxpayer has a substantial purpose (apart from Federal income tax effects) for entering into