AboutJohn Stancil, CPA Expertise I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 30 years. I am a member of the AICPA, National Society of Tax Professionals, and the Institute of Management Accountants.
Experience I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CFM, and CIA. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I write a monthly tax column for the local newspaper.
I just got a new client and while looking at their tax balance sheet, I noticed
there was treasury stock. I asked the client about it and they were not aware
of it, and the prior accountant didn't provide any help either.
My question is, what does this mean to the corporation? They are an S-Corporation. Should they retire the treasury stock or try or should the two shareholders sell it back to themselves.
I am trying to determine the best thing to do should they eventually sell the business. Can you give me some info on treasury stock and then let me know what the options are.
Thank you in advance,
Jeff
Answer Jeff,
Thanks for your question.
It really doesn't matter what they do with the treasury stock. It is stock that the company has repurchased from shareholders at some point in the past.
They can sell it to themselves to increase the amount of capital in the company, they can retire the stock and close the treasury stock to retained earnings, or they could use it to cover stock options that they grant to themselves.
