s corp share tax

[cushingme]

What is the name of your state?What is the name of your state? Maine.
When a small S corp issues shares to an individual is that individual subject to an income tax for the year that the shares are issued for the current market value or is the individual only subject to a tax when he/she sells those shares.

[LdiJ]

Originally Posted by cushingme

What is the name of your state?What is the name of your state? Maine.
When a small S corp issues shares to an individual is that individual subject to an income tax for the year that the shares are issued for the current market value or is the individual only subject to a tax when he/she sells those shares.

Shareholders in an S corp are subject to income taxes on the corporation's income, whether that income is distributed to the shareholder's or not. Therefore, for the partial year, and for every year in the future, as long as you own the shares, you will be subject to income taxes for your proportional share of the corporation's income. If the corporation has a loss, you would also share in that loss and the subsequent tax benefit.

You may also be subject to capital gains taxes as well, if and when you sell the shares.