Shares in a C Corporation

[clueless3]

What is the name of your state? CA

I have always wondered about this:

* When a C corporation is formed, it needs to disclose how many shares it plans to issue. Now, is this number of shares related to the amount of money it plans to have in the bank at the beginning?

* Can a share be set to be worth a certain dollar amount? or that amount set by the state? What I mean is: over time, if no new shares are issued, the total assets of the corporation will change, therefore each stock certificate will be worth a dollar amount different from when it was created. In this case, does the corporation need to issue more shares to make up for the increase in total assets?

* In a private corporation, let's say if an officer "sells" his shares to another corporation, what are the tax implications (with both the seller and the buyer)?

Thanks!

 

[divgradcurl]

When a C corporation is formed, it needs to disclose how many shares it plans to issue. Now, is this number of shares related to the amount of money it plans to have in the bank at the beginning?

It could, but it doesn't have to be. The value of each share will be related to the overall value of the corporation, but the number of shares will just affect the value of each share.

Can a share be set to be worth a certain dollar amount? or that amount set by the state?

Yes, shares can be set to be worth a certain dollar amount, called a "par value."

What I mean is: over time, if no new shares are issued, the total assets of the corporation will change, therefore each stock certificate will be worth a dollar amount different from when it was created. In this case, does the corporation need to issue more shares to make up for the increase in total assets?

No, there is no reason to issue new shares -- the value of an share in a corporation is simply the value of the corporation divided by the number of shares, so the value of each share will float depending on the value of the company -- at least for privately-held companies, that is -- public companies have share prices that are based on any number of factors. Read up on stock valuation here: http://www.activefilings.com/en/information/faq_shares.htm

In a private corporation, let's say if an officer "sells" his shares to another corporation, what are the tax implications (with both the seller and the buyer)?

Generally speaking, the seller will have to pay capital gains taxes on any gain made on the sale, and the buyer will now hold the stock with a basis (for calculating gains) equal to the purchase price of the stock.