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CH 10

- The board of directors of a corporation considered electing S corporation tax status and agreed to do so. The treasurer was tasked with preparing and filing the necessary forms, including having all shareholders and spouses sign consent forms. - The shareholders and spouses of the corporation signed an agreement to maintain the corporation's S corporation tax status by not transferring shares in a way that would cause the corporation to lose eligibility. They also agreed to sign any necessary consent forms. - The board resolved to accumulate certain corporate earnings to provide for reasonably anticipated business needs, as agreed with the corporation's accountant. The treasurer was instructed to make these accumulations.

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49 views4 pages

CH 10

- The board of directors of a corporation considered electing S corporation tax status and agreed to do so. The treasurer was tasked with preparing and filing the necessary forms, including having all shareholders and spouses sign consent forms. - The shareholders and spouses of the corporation signed an agreement to maintain the corporation's S corporation tax status by not transferring shares in a way that would cause the corporation to lose eligibility. They also agreed to sign any necessary consent forms. - The board resolved to accumulate certain corporate earnings to provide for reasonably anticipated business needs, as agreed with the corporation's accountant. The treasurer was instructed to make these accumulations.

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vikasbks
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as RTF, PDF, TXT or read online on Scribd
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****************************************

Form: CH10_01
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S CORPORATION TAX ELECTION
The board of directors considered the advantages of electing S corporation tax status for
the corporation under Section 1362 of the Internal Revenue Code. After discussion,
which included a report from the treasurer that the corporation's accountant had been
consulted and concurred with the board's decision, it was agreed that the corporation shall
elect S corporation tax status with the IRS ____["and with the (name of state corporate
tax agency, such as "Department of Revenue and Taxation") for the State of (name of
state)"]____.
It was further agreed that the treasurer of the corporation be delegated the task of
preparing and filing IRS Form 2553 and any other required forms in a timely manner so
that the S corporation tax election will be effective starting with the ___[tax year]___ tax
year of the corporation. The treasurer was further instructed to have all shareholders and
their spouses sign the shareholder consent portion of the IRS form.
****************************************
Form: CH10_02
****************************************
S CORPORATION SHAREHOLDERS' AGREEMENT
The undersigned shareholders and spouses of shareholders of ____[name of
corporation]____ represent and agree as follows:
The board of directors has approved a resolution authorizing the corporation to elect S
corporation tax status with the IRS under Section 1362 of the Internal Revenue Code, to
be effective for the corporate tax year beginning ___[start date of first S corporation tax
year]___.
To help preserve and maintain the effectiveness of this S corporation tax status, the
undersigned agree that they shall not transfer, sell, assign, convey, or otherwise dispose of
their shares, or any interest in these shares, if such disposition would result in the
corporation's no longer being eligible for S corporation tax status with the IRS.
The undersigned further agree to sign any consent forms or other documents necessary to
elect and obtain S corporation tax status with the IRS in a timely matter as requested by
the treasurer of the corporation.
The undersigned further agree that, even if a proposed transfer or other disposition of
shares does not jeopardize the corporation's S corporation tax status, no such transfer or
disposition shall take place until the proposed shareholder and the proposed shareholder's
spouse consent to the corporation's S corporation tax status, and sign an agreement that

contains substantially the same terms as this agreement.


This agreement may be terminated by the consent of a majority of the outstanding
shareholders of this corporation. Any person who breaches this agreement shall be liable
to the corporation, its officers, directors, shareholders, spouses of shareholders, and any
transferees of shareholders or their spouses, for all losses, claims, damages, taxes, fines,
penalties, and other liabilities resulting from the breach of this agreement.
This agreement shall bind all parties, their successors, assigns, legal representatives, heirs
and successors in interest. The undersigned shall ensure that any such successors and
representatives shall be given a copy of this agreement prior to, or at the same time as,
the delivery of any share certificates to them. A conspicuous legend shall be placed on all
share certificates of the corporation indicating that the shares are subject to restrictions on
transferability and that the holder may obtain a copy of these restrictions at any time from
the secretary of the corporation.
Date: __________
Signature

Printed Name

____________________

____________________

____________________

____________________

____________________

____________________

____________________

____________________

____________________

____________________

****************************************
Form: CH10_03
****************************************
ACCUMULATION OF CORPORATE EARNINGS
After discussion, the board resolved that it was necessary to retain the following earnings
in the corporation to provide for the following reasonably anticipated needs of the
business:
___[insert schedule of anticipated accumulations of corporate earnings and reasons for
these accumulations]___
The treasurer of the corporation reported that the corporation's accountant had been
consulted and agreed that the above accumulations should qualify as reasonable needs of
the business under Internal Revenue Code Section 537(a).
The above accumulations of corporate earnings were approved, and the treasurer was

instructed to see to it that these accumulations of corporate earnings are made.


****************************************
Form: CH10_04
****************************************
QUALIFICATION OF SHARES UNDER INTERNAL REVENUE CODE
SECTION 1244
The board discussed the advisability of qualifying the shares of this corporation as
Section 1244 stock as defined in Section 1244 of the Internal Revenue Code, and of
operating the corporation so that it is a small business corporation as defined in that
section.
It was agreed that the president and treasurer of the corporation are, subject to the
requirements and restrictions of federal and state securities laws, authorized to sell and
issue shares of stock in return for the receipt of an aggregate amount of money and other
property, as a contribution to capital, and as paid-in surplus, which does not exceed
$1,000,000.
It was also agreed that the sale and issuance of shares shall be conducted in compliance
with Section 1244 so that the corporation and its shareholders may obtain the benefits of
that section.
The above officers are directed to maintain such records pursuant to Section 1244 so that
any shareholder who experiences a loss on the transfer of shares of stock of the
corporation may determine whether he or she qualifies for ordinary loss deduction
treatment on his or her individual income tax return.
****************************************
Form: CH10_05
****************************************
APPROVAL OF INDEPENDENT AUDIT OF CORPORATE FINANCIAL
RECORDS
After discussion, it was agreed by the board that the accounting firm of ____[name of
accountant or firm]____ was selected to perform an independent audit of the financial
records of the corporation for the ___[year]___ fiscal year and to prepare all necessary
financial statements for the corporation as part of its independent audit.
The treasurer was instructed to work with the auditors to provide all records of corporate
finances and transactions that may be requested by them, and to report to the board on the
results of the audit upon its completion.

****************************************
Form: CH10_06
****************************************
APPROVAL OF CORPORATE TAX YEAR
The chairperson informed the board that the next order of business was the selection of
the corporation's tax year. After discussion and a report from the treasurer, which
included advice obtained from the corporation's accountant, it was resolved that the
accounting period of this corporation shall end on the ___[ending date, usually the "31st
of December" or the last date of another month]___ of each year.
****************************************
Form: CH10_07
****************************************
PAYMENT AND DEDUCTION OF ORGANIZATIONAL EXPENSES
The board considered the question of paying the expenses incurred in the formation of
this corporation. A motion was made, seconded, and unanimously approved, and it was
resolved that the president and treasurer of this corporation are authorized and
empowered to pay all reasonable and proper expenses incurred in connection with the
organization of the corporation, including, among others, filing, licensing, and attorney
and accountant fees, and to reimburse any directors, officers, staff, or other persons who
have made or do make any such disbursements for and on behalf of the corporation.
It was further resolved that the treasurer is authorized to elect to deduct and amortize the
foregoing expenses pursuant to, and to the extent permitted by, Section 248 of the
Internal Revenue Code of 1986, as amended.

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