[WSBAPT] Disclaimer of S Corp shares

[jeffrey winter]

Listmates:
 
Deceased was a health care professional who owned two businesses.  Neither
was apparently set up as a professional service corporation, but both
arguably should have been.
 
 One business, in which the decedent was sole shareholder(business #1) was
sold to third party practitioners about the time of his death.  His
corporation continues to receive payments from purchasers.  The
corporation made an S election.   The second business (business #2) has a
partner who I believe is properly licensed, but there is no buy/sell in
effect.
 
My query with respect to business #1 is:  can the surviving spouse
disclaim the shares (and her community interest therein) to a disclaimer
trust for purposes of reducing her taxable estate?  Is there anything
beyond making a QSST election (and executing the corporate transfer
documents as PR of the estate) that the surviving spouse needs to do to
effect this transfer?  (She will be the only income and principal
beneficiary of the trust until her death)
 
The twist, of course, is that in my view, the spouse is not eligible to be
a shareholder (either in her individual capacity nor as trustee of the
disclaimer trust) because she is not licensed to practice.  On the other
hand, there is no need for her to practice -- she is merely effecting
receipt of payments for purposes of winding up the business.  RCW
18.100.118 allows an estate to hold such shares, but only for 12 months.
What happens after that -- dissolve the corp and do a purchaser's
assignment to the disclaimer trust?  The accountant involved would like to
steer clear of dissolving the corporation and distributing its asset....
 
With respect to business #2, we have not approached the partner, but what
techniques are available to induce a fair sale to the estate?
 
As always, I greatly appreciate your thoughts!
 



Jeffrey D. Winter




Law Office of Jeffrey D. Winter, P.S.
604 North Main Street
Ellensburg, WA 98926
(509) 925-9600 tel.
(509) 925-9606 fax




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