TELESEMINAR: S Corp Business Planning & Stockholder Agreements, Part 2 – A National Perspective
February 20, 2013
12:00 – 1:00 p.m.
1.00 MCLE hours
S Corps have always been a popular choice of entity for closely held businesses because of certain tax advantages they have over LLCs. The new 3.8% Medicare tax, which applies differently to S Corps than to LLCs/partnerships, will increase the appeal of S Corps. But S Corps are still fragile entities, with limitations on the number and type of shareholders they may have and restrictions on the type of equity and debt they may issue. Drafting the S Corp stockholders’ agreement is a careful balance of maximizing tax benefits, preventing the loss of the preferred tax status through inadvertently disqualifying corporate actions, and maximizing organizational flexibility in other areas. This program will discuss essential components of an S Corp stockholders’ agreement, including restrictions on capital structure and voting, transferability issues, equity and incentive compensation, and tax allocations and property distributions. Part 2 of 2.
- Overview of new tax advantages of using an S Corp over an LLC after the new Medicare tax
- Understanding the tax advantages/disadvantages of withdrawing money as salary or distributions
- Incentive compensation issues, including fringe benefits and restrictions on deductibility
- Planning for and drafting for distributions and allocations
Alson R. Martin, Lathrop and Gage, LLP, Kansas