2020 Planning with S Corps, Part 2

Despite the prevalence of LLCs, S Corps remain a preferred choice of entity for many family-controlled and other closely-held businesses. They retain certain tax advantages over other pass-through entities and their corporate structure makes them familiar to investors, their legal counselors, and lenders. Still, S Corps are “fragile” entities in the sense that the tradeoff for their tax and other benefits is that they must adhere to a several capital structure restrictions, which limit their flexibility.  Drafting S Corp stockholders’ agreements is a careful balance of maximizing tax benefits, preventing the loss of the preferred tax status through inadvertently disqualifying corporate actions, and maximizing organizational flexibility in other areas. This program will provide you with a real world guide to business planning with S Corps and drafting their underlying stockholder agreements.

Day 1

• Business planning with S Corps and drafting S stockholders’ agreements
• Counseling clients on choice of entity considerations of S Corps v. LLCs/partnerships
• Capital structure issues – restrictions on types of debt and equity
• Who qualifies as an eligible  S Corp stockholder
• Transferability of interests and restrictions to preserve S Corp status

Day 2

• Understanding tax benefits (and traps) of S Corps
• Distribution planning in S Corps – tax advantages/disadvantages of withdrawing money as salary or distributions
• Incentive compensation issues, including fringe benefits and restrictions on deductibility
• Planning for the merger or sale of an S Corp into another S Corp, LLC or C Corp

Note: This material qualifies for self-study credit only. Pursuant to Regulation 15.04.5, a lawyer may receive up to six hours of self-study credit in a reporting year. Self-study programs do not qualify for GAL Certification, ethics, elimination of bias or Kansas credit.