[WSBARP] majority share transfer/closely held corp - future fallout?

[Tom Lee]

Braintrust,

I could use some guidance on a share transfer in a closely held professional corporation.

Late last year, the corp's two partners agreed that X amount unused shares in the corporate "bank" should be transferred to younger partner, to make younger partner the majority shareholder and compensate for outstanding performance. Older partner used a small amount of older partner's shares to make the majority. (majority shareholder will soon-ish retire, cash out remaining shares in future). The transfers were signed off by corp's accountant.

The concern by some parties is the value of older partner's remaining shares; when older partner cashes out, and the sells his shares at an exponentially higher rate, how will the corp justify the (inevitably) dramatic increase in price of the shares?

In reviewing the transaction, my concern is that legal concerns are being bled with accounting/tax concerns. I guess my question is, based on my hypothetical, is there legal advice - not tax advice - with regards to future IRS implications due to the dramatic share value price increased, that a reviewing attorney should consider?

Much appreciated.


TOM LEE

Attorney

R. THOMAS LEE, PLLC | Attorney and Counselor at Law | A Professional Limited Liability Company

rtl at rtleelaw.attorney | website: http://www.rtleelaw.attorney<http://www.rtleelaw.attorney/>


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