What is the name of your state (only U.S. law)? Arizona
I have an S-corp that is replacing one of its 3 partners. Our initial contributions were $5,000 each so we own 1/3 each. Our 3rd partner has agreed to leave the company if we pay him back his initial investment. We have picked up a partner that is willing to buy in for a 1/3 share and pay off our original partner.
We feel that our company is worth more than when we started it and the new partner has agreed to pay $7,500 to buy the 1/3 ownership. The difficulty is in how the capital account balances dictate your ownership. His capital account will have $2,500 more than both of the other two partners.
How can we do this?
I am a bit confused on the distinction between stock ownership and its relationship to the shareholders capital account and % of ownership.
We want him to put $7,500 capital in but still own 33% of the company.
I have an S-corp that is replacing one of its 3 partners. Our initial contributions were $5,000 each so we own 1/3 each. Our 3rd partner has agreed to leave the company if we pay him back his initial investment. We have picked up a partner that is willing to buy in for a 1/3 share and pay off our original partner.
We feel that our company is worth more than when we started it and the new partner has agreed to pay $7,500 to buy the 1/3 ownership. The difficulty is in how the capital account balances dictate your ownership. His capital account will have $2,500 more than both of the other two partners.
How can we do this?
I am a bit confused on the distinction between stock ownership and its relationship to the shareholders capital account and % of ownership.
We want him to put $7,500 capital in but still own 33% of the company.