title>Tax Guru-Ker$tetter Letter Wizard Animation

                 

Tax Guru-Ker$tetter Letter
Saturday, April 08, 2006
 
S Corp Subsidiaries

 

Q:

Subject: S corps

Just read your article - have a couple of questions.
 
1.  Can an S corp own another S corp with the second S corp having addl shareholders?
 
2.  Is there an S corp structure that does not allow addl stockholders.  For instance - you have an S corp -as an S corp another entity is purchased - can the addl entity have additional owners or must they be the same as the parent S corp.  The purchased entity not being an S Corp.
 
I guess both of these questions are basically the same.  What I have is an S corp for sale, possibly being purchased by another S corp.....the stockholders of the purchasing S Corp have indicated they CANNOT have other stockholders for just the new purchase.  It has been indicated that the purchasing S corp is some special type of S corp....
 
Anyway - any information would be helpful.
 
Thanks!

A:

This is most definitely a very complicated area where a professional tax advisor should be involved. 

There are ways for an S corp to own another S corp as what is called a QSub (Qualified Subchapter S Subsidiary).  You can check IRS Form 8869  and see what is involved.

Good luck.

Kerry Kerstetter

 


- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 4/08/2006 10:55:00 AM Send this post:

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