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Selling Shares in S Corp Family Farm, $25 million in assets?

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    I want to sell my shares and financially dissociate myself from the family farm. I own a lot (30+) of residential rental real estate and have a very good income now. My real estate investments cash flow, but I do have some debt (about $400k). I will also probably inherit money from other family members over the next 5 to 10 years. The millions I will get from the farm years down the road won't be as interesting to me later, as it is now. I know the farm might be 3 or 4 times bigger in 20 to 30 more years that my dad might live, but I am savvy and will grow the money as well. I am late 30's, and this money would be more interesting now, than much later. Some more millions when I am 50+, will be less much interesting than a fraction of it now. I know how to make a lot of money on money in real estate right now. I will probably make a better rate of return on the money, than this livestock farm is doing.  We don't receive any dividends and it is just a bunch of 6 or 7 digit numbers on K-1's for me to add to my taxes. The farm does pay the taxes on this, but this last year it got me out of paying any taxes. Some of the numbers from the 2015 K-1 are -$170k ordinary income. $15k interest. $220k net gain. In 2016 the K1 was -$1 million ordinary income, $155k net gain. $400k loss applied this year. $530k end of year disallowed losses. The farm had a bad year last year. 

     You wonder why I just don't talk to my dad about it? We don't get along at all. There are 800 shares of voting stock, and 72,200 of non voting stock. I have 10 shares of voting stock, and about 12k shares of nonvoting stock. The By Laws don't mention anything about the rules for selling shares. My accountant told me that my shares, 16%, should be worth roughly 16% of the Total Assets, $25,000,000. The farm is split up in that my dad owns the land, and my siblings and I own the operations, equipment, and the livestock operations. The farm is in Kentucky. My accountant said that even though it was a closely held S Corp, wealthy people would want to buy shares, because it would reduce their tax liability by a lot, or he said something like that. He was clear, that to my surprise, people would want to buy the shares, if the farm didn't want to buy them. First we will try to sell them back to the farm. 

   I have left voicemails with a couple attorneys, a couple financial advisors, and a couple more accountants to try and get some 2nd opinions and advice. If anyone on here had some advice or experience with this I would greatly appreciate it? Thanks in advance for some good advice or knowledge! 

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It's always best to get along with the people you're in business with.  If not, selling seems reasonable if you can get an ok price, either from them or an outside investor (should the bylaws allow that).  I'd start by seeing if any of your family members or perhaps the farm business at large might be interested in buying your shares.  

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With less than 2% of voting shares you can get screwed if you cause too many problems. Folks generally don't take kind to a member selling part of a family farm to outsiders. Dilution is a major risk.

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I'm sorry. How is a farm that doesn't own the land worth 25 million?

I'm sure your partners are going to want to have the first chance to buy you out. Do they have the money to do so, or is their money also tied up in the valuable but illiquid farm as well?

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I would work with the stakeholders to offer first rights. With such a minuscule amount of voting rights, they could potentially do anything they want to ensure you get nothing.

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desideratapoem said:   My accountant told me that my shares, 16%, should be worth roughly 16% of the Total Assets, $25,000,000.  The farm is split up in that my dad owns the land, and my siblings and I own the operations, equipment, and the livestock operations. 
The operations, equipment and animals (not including the land) are worth $25 million???

It would really surprise me that someone would go to all the trouble to set up this legal Enterprise with this level of sophistication and not have made provisions for the sale of shares or a prohibition on such.  Give those documents another read.  Your best bet is to get one of your siblings to buy you out, but the most common dilemma in these scenarios is that nobody has the cash without selling the farm itself.
 

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How did you determine the value of the farm? Where is the $25M figure coming from? Is there an actual appraisal or is that someones estimate (wild guess)?
Is that really just the equipment, etc or does that $25 include the land?

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Would have to be a dairy farm with significant buildings and milking equipment. Even a couple $300k combines, $250k tractors, $150k sprayer, etc, no way to get to $25 million net assets on any kind of row crop farm.

My guess is the OP had gross and net assets confused.

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xerty said:   It's always best to get along with the people you're in business with.  If not, selling seems reasonable if you can get an ok price, either from them or an outside investor (should the bylaws allow that).  I'd start by seeing if any of your family members or perhaps the farm business at large might be interested in buying your shares.  
  Thanks, yes, we will try the other family members first. 

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wilesmt said:   With less than 2% of voting shares you can get screwed if you cause too many problems. Folks generally don't take kind to a member selling part of a family farm to outsiders. Dilution is a major risk.
  The accountant said that worst that the farm could do was run down the price of the equipment and assets that would be sold, and I would get at worst 10% of the 16% of the $25 million. So, the farm wants to screw me and let my siblings burn as well, it could auction off the assets and take as little as 10% of their value, instead of a reasonable 50% or better. So, it takes 10% of $25 million, so $2.5 million and then this gets split among us siblings, so I would receive 16% of that, = $400,000. The accountant said that this besides screwing the siblings who did not rock the boat, would screw the farm, because they would have to buy back all this needed equipment. I don't care to wait 20 or 30 more years for much more money. And my sibling that will take over the farm makes Joffrey from Game of Thrones look like Mr Rogers. I want to bail out while the bailing is good.  

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TravelerMSY said:   I'm sorry. How is a farm that doesn't own the land worth 25 million?

I'm sure your partners are going to want to have the first chance to buy you out. Do they have the money to do so, or is their money also tied up in the valuable but illiquid farm as well?

 As I understand it, the land is in my dad's name under a different LLC, or Corp. Then the 2nd Corp rents the land. I think it is about 2k acres. There is about 100k hogs, 200+ employees, 25+ rental houses. I hope the family wants to buy it out at a fair price. I am not trying to cause trouble like that. I just want to move on financially. I will offer for them to make payments over some years, or whatever. I just want out. The farm had a bad year last year, but it can come up with the money. I was the accountant there before I had a falling out. 

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wilesmt said:   Would have to be a dairy farm with significant buildings and milking equipment. Even a couple $300k combines, $250k tractors, $150k sprayer, etc, no way to get to $25 million net assets on any kind of row crop farm.

My guess is the OP had gross and net assets confused.

  The farm has 100k hogs, 200+ employees, and I think a couple thousand acres. In 2014, on the 1120s, line 1a, Gross receipts were $36 million. Line F, Total Assets were $20 million. 

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dcwilbur said:   
desideratapoem said:   My accountant told me that my shares, 16%, should be worth roughly 16% of the Total Assets, $25,000,000.  The farm is split up in that my dad owns the land, and my siblings and I own the operations, equipment, and the livestock operations. 
The operations, equipment and animals (not including the land) are worth $25 million???

It would really surprise me that someone would go to all the trouble to set up this legal Enterprise with this level of sophistication and not have made provisions for the sale of shares or a prohibition on such.  Give those documents another read.  Your best bet is to get one of your siblings to buy you out, but the most common dilemma in these scenarios is that nobody has the cash without selling the farm itself.

  Yeah, I agree. I would think it would also, but I have a copy of the By Laws, which is only 2 pages, and there is no mention of it. My older brother, who is the Vice President, should want to buy me out. But like I posted elsewhere, he is commonly characterized as a combination of King Joffrey and Ramsay Bolton on Game of Thrones. As a manager, he is the reason the society had to outlaw slavery and indentured servitude. He is a major narcissistic, entitled, misogynist, jerk. (I am his sister. I was the accountant at the farm, until I couldn't take him any longer. Got married and moved away.)

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If your brother is Joffrey + Bolton then you're guilty of a felony for failing to report his crimes.

I think you either haven't seen the show or you're grossly exaggerating.

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desideratapoem said:        My accountant told me that my shares, 16%, should be worth roughly 16% of the Total Assets, $25,000,000. The farm is split up in that my dad owns the land, and my siblings and I own the operations, equipment, and the livestock operations. The farm is in Kentucky. My accountant said that even though it was a closely held S Corp, wealthy people would want to buy shares, because it would reduce their tax liability by a lot, or he said something like that. He was clear, that to my surprise, people would want to buy the shares, if the farm didn't want to buy them. First we will try to sell them back to the farm. 

 

The book value is quite different from market value.  You'll be lucky to get 20-cents on the dollar, given the complete lack of control the shares represent.  People may be willing to buy them, but they are going to really beat you up on the price.

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Thanks Glitch99. The accountant said that the shares should be worth at least $1,600,000 to outside investors and even probably more to the farm. The accountant said wealthier people should want to pay around $100k per share in the amount of tax write offs it will bring them. I am getting some 2nd opinions from other accountants in the next few days. 

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Congratulations on your new vegan lifestyle. Get out there with Howard Lyman and do some good in the world!

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Because OP brother is VINDICTIVE. I would proceed in secrecy & not count on any help from involved family.

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desideratapoem said:   
     You wonder why I just don't talk to my dad about it? We don't get along at all. There are 800 shares of voting stock, and 72,200 of non voting stock. I have 10 shares of voting stock, and about 12k shares of nonvoting stock. The By Laws don't mention anything about the rules for selling shares. My accountant told me that my shares, 16%, should be worth roughly 16% of the Total Assets, $25,000,000. 
 


Smart move getting professional advice.  I doubt anyone here is an expert in Kentucky close corporations law, and any adviser will need a lot more details.  Some questions you might want to explore with your advisers:

-Is it really an S Corporation? I believe S Corps are not permitted to have multiple classes of stock (e.g., the voting and non-voting shares you mentioned).

-Is there a shareholder agreement?  The articles of incorporation and the bylaws aren't usually very detailed for a closely held S Corporation.  Instead, the most important rights are often memorialized in a shareholder agreement.  Any thought out shareholder agreement will cover the disposition of shares, including rights of first offer/refusal, drag/tag rights, valuation, etc.  If there is one, it will give you a much better idea about your options.

-If you do sell, be prepared for a significant minority discount.  There may very well be a market among outside investors for the tax benefits and long-term business value, but discounts for non-controlling stakes can be 15-40%.  

-The real way that the majority could drain value is by paying themselves handsome salaries.  Since you no longer work there, it is probably hard for you to monitor this.  As a shareholder, you may be to learn more about these types of dealings by requesting access to corporate records.  Dilution was already mentioned as another potential danger.  These types of things contribute to the minority discount.

-Valuation is a tricky problem in these types of circumstances, and they depend heavily on the assumptions made (e.g., growth, discount rates, etc.).  A buyer will want to have a lot more information than just the net assets and the K-1s.  Offering it to the family first could lead to a quicker resolution but may also lead to more hard feelings if you are offered a lowball price.  

-There may be securities law limits on to whom you can sell without registering the securities.  Exemptions may be applicable, but your attorney will need to confirm.

- These things can get very unpleasant very quickly.  I can understand wanting cash and the freedom, but there may be hard feelings even if you do get bought out at a relatively fair price.  A plausible scenario is suing for partition and waiting years to get any money that is left.  

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desideratapoem said:   Thanks Glitch99. The accountant said that the shares should be worth at least $1,600,000 to outside investors and even probably more to the farm. The accountant said wealthier people should want to pay around $100k per share in the amount of tax write offs it will bring them. I am getting some 2nd opinions from other accountants in the next few days. 
Your accountant is an idiot.  What wealthy people would like is a tax shelter but not really losing money.  Real estate was a prime example until Congress changed the laws way back when.  
Wealthy people have no interest in making an investment to lose money, which is what the "write off" would  ensue in an active business.  Wealthy people would just donate the money and get a direct writeoff.  Yes I realize there's some depreciation in machines and whatnot, but it should be relatively small.  
 

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desideratapoem said:   
TravelerMSY said:   I'm sorry. How is a farm that doesn't own the land worth 25 million?

I'm sure your partners are going to want to have the first chance to buy you out. Do they have the money to do so, or is their money also tied up in the valuable but illiquid farm as well?

 As I understand it, the land is in my dad's name under a different LLC, or Corp. Then the 2nd Corp rents the land. I think it is about 2k acres. There is about 100k hogs, 200+ employees, 25+ rental houses. I hope the family wants to buy it out at a fair price. I am not trying to cause trouble like that. I just want to move on financially. I will offer for them to make payments over some years, or whatever. I just want out. The farm had a bad year last year, but it can come up with the money. I was the accountant there before I had a falling out. 

  
This sounds similar to the Iowa farm thread a few years back -- same thing where the parents owned the major land assets and then leased them to the farm company that was run by their favored children.  So the parents have a retirement income without having to work the actual farm.  When they pass the next generation takes the land and their kids run the farm.  

The way the voting shares can screw you is simply by increasing the rental paid to the parents, since that would go into the CORP that the next generation will take over and not necessarily the actual estate.  That is one reason these nested corps exist,  they can move money from pocket to pocket. The other part is that they can drag it out for years, particularly in their "home" court district.  My guess if your bro is the ass that you paint him he will offer you a fraction of the value with the implied threat of devaluation.  That sort take things personally.  Best bet is a quiet sale to someone else that dislikes him in the family but is planning to stay.

These farm corps are odd, they basically never pay dividends and are set up as a sort of commune -- you work and get paid for what you put in.  You may find that in however many years when the corp turns over that the voting shares vote to keep all the value and not liquidate  --and there you are with those worthless shares.   So good luck.  Be thankful that you are successful enough to not need anything from them at all.

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Feed your brother to the hogs.
Just kidding of course.
My question how close is your brother to your dad? And can brother sway the controlling stock????

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An S-Corp can only have one class of shares. If the only difference is voting vs. non-voting, it wouldn't violate the one-class of shares limitation. If profits and losses were not shared equally, it would violate the restriction. 

Common reasons for using such a structure include: savings on gift or estate taxes, maintaining control and limitation of liability. Because the control is vested in the voting shares, the non-voting shares would have a much lower value for gift and estate taxes. If someone obtained a judgement against a non-voting shareholder and obtained her shares, it would be easy for the remaining shareholders to diminish the value of those shares. There is minimal value in a non-voting minority stake in a closely held Enterprise for an outside investor.

At a huge discount, there might be an interest in shares containing the land, which the OP doesn't own, but I expect that few would consider non-voting shares containing the other assets at any value that a reasonable seller would consider. After all, it is not as if an outsider could force a sale of the property if he felt the assets were being mismanaged or used for the benefit of insiders. If the OP wants to liquidate, her shares would be worth far more to a family member than to an outside investor. 

Although the entities are different, a search for family limited partnerships should provide some insight into the OP's situation.

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The farm doesn't need to have the cash on hand to buy you out, I'd imagine it could finance with its own equity to just perform share buy-backs. So the bank just pays you and gives a loan to the farm with some reasonable terms. The question is how much you actually get for the shares.

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Where did you get these shares and when?

If this was a gift from your family/dad and now you're not on speaking terms, selling is not going to go well for you. With control of the voting they can and will easily screw you. Your accountant is an idiot and giving advice far over his head.

If you want to get in the family money you are likely going to have to make up with the family, not just try to cut and run.

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I think you will have to play nice for a few years and then ask to cash out...because as much of a financial genius as you might be, taking 10 cents on the dollar if you have to fire sale it wouldn't be smart unless you know a way to make 10x money in less than 3 years...if so let us all know.

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tightpapa said:   Feed your brother to the hogs.
Just kidding of course.
My question how close is your brother to your dad? And can brother sway the controlling stock????

  My dad tolerates him. Doesn't have a choice. He is the only son, and my dad thinks only a son could take over his farm. 

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Al3xK said:   The farm doesn't need to have the cash on hand to buy you out, I'd imagine it could finance with its own equity to just perform share buy-backs. So the bank just pays you and gives a loan to the farm with some reasonable terms. The question is how much you actually get for the shares.
  Yes, the farm could get a loan to buy me out, or it could just slow down on it's major expansions every year, and make some payments to me. 

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fourchar said:   Where did you get these shares and when?

If this was a gift from your family/dad and now you're not on speaking terms, selling is not going to go well for you. With control of the voting they can and will easily screw you. Your accountant is an idiot and giving advice far over his head.

If you want to get in the family money you are likely going to have to make up with the family, not just try to cut and run.

  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

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I'm with the people that say your accountant is out of his league when he says that there are outsiders that would be interesting in buying your stock. Best to just deal with the family on this one.

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desideratapoem said:   
  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

  
Not sure how this doesn't qualify as a gift.    Legally how did you obtain the shares?    If someone gave a large asset to you then its a gift.    


Or did you actually pay for those shares?   

 

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desideratapoem said:   
fourchar said:   Where did you get these shares and when?

If this was a gift from your family/dad and now you're not on speaking terms, selling is not going to go well for you. With control of the voting they can and will easily screw you. Your accountant is an idiot and giving advice far over his head.

If you want to get in the family money you are likely going to have to make up with the family, not just try to cut and run.

  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

  
S Corp is supposed to be pass through like LLC. Not sure, when you say other money can stay and remain untaxed - Are you suggesting that your dad is hiding taxes? 

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jerosen said:   
desideratapoem said:   
  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

  
Not sure how this doesn't qualify as a gift.    Legally how did you obtain the shares?    If someone gave a large asset to you then its a gift.    


Or did you actually pay for those shares?   

 

  
She did work for the farm for a while. The shares could have been compensation.

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meade18 said:   
jerosen said:   
desideratapoem said:   
  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

  
Not sure how this doesn't qualify as a gift.    Legally how did you obtain the shares?    If someone gave a large asset to you then its a gift.    


Or did you actually pay for those shares?   

 

  
She did work for the farm for a while. The shares could have been compensation.

  

Oh yeh its possible, and I asked.  

But the "its not a gift" is then directly contradicted by "a way for the owner to pass the farm to heirs with minimal estate taxes".



 

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jerosen said:   
desideratapoem said:   
  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

  
Not sure how this doesn't qualify as a gift.    Legally how did you obtain the shares?    If someone gave a large asset to you then its a gift.    


Or did you actually pay for those shares?   

 

Since this is a complicated enough structure, it is likely that his father would have utilized someone with enough knowledge to recommend filing a gift tax return in order to start the statute of limitations for an IRS challenge. If the business starts out small and later becomes very successful many years later and no gift taxes were paid later, the IRS could go challenge the initial valuation after the donor died. On the other hand, if  a gift tax return was filed, the IRS would normally only have three years to challenge the valuation. 

Taxation 

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desideratapoem said:     My dad tolerates him. Doesn't have a choice. He is the only son, and my dad thinks only a son could take over his farm
 

  Maybe the apple doesnt fall far from the tree.
desideratapoem said:     Yeah, I agree. I would think it would also, but I have a copy of the By Laws, which is only 2 pages, and there is no mention of it. My older brother, who is the Vice President, should want to buy me out. But like I posted elsewhere, he is commonly characterized as a combination of King Joffrey and Ramsay Bolton on Game of Thrones. As a manager, he is the reason the society had to outlaw slavery and indentured servitude. He is a major narcissistic, entitled, misogynist, jerk. (I am his sister. I was the accountant at the farm, until I couldn't take him any longer. Got married and moved away.)
  

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NYKnicksFan said:   
desideratapoem said:   
fourchar said:   Where did you get these shares and when?

If this was a gift from your family/dad and now you're not on speaking terms, selling is not going to go well for you. With control of the voting they can and will easily screw you. Your accountant is an idiot and giving advice far over his head.

If you want to get in the family money you are likely going to have to make up with the family, not just try to cut and run.

  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

  
S Corp is supposed to be pass through like LLC. Not sure, when you say other money can stay and remain untaxed - Are you suggesting that your dad is hiding taxes? 

  Profit reinvested buying neighboring farms and equipment isn't taxed. In real estate, the $150k+ I make a year get's reinvested in new real estate and rentals and by the end of the year my business has grown a lot, and I don't have much or zero taxes to pay. 

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desideratapoem said:   
NYKnicksFan said:   
desideratapoem said:   
fourchar said:   Where did you get these shares and when?

If this was a gift from your family/dad and now you're not on speaking terms, selling is not going to go well for you. With control of the voting they can and will easily screw you. Your accountant is an idiot and giving advice far over his head.

If you want to get in the family money you are likely going to have to make up with the family, not just try to cut and run.

  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

  
S Corp is supposed to be pass through like LLC. Not sure, when you say other money can stay and remain untaxed - Are you suggesting that your dad is hiding taxes? 

  Profit reinvested buying neighboring farms and equipment isn't taxed. In real estate, the $150k+ I make a year get's reinvested in new real estate and rentals and by the end of the year my business has grown a lot, and I don't have much or zero taxes to pay. 

Is this the same accountant shyster telling you wealthy people would buy your shares, also telling you this?  Or maybe there's some "funny numbers" going on.  Profit is taxed.  Always.  Are you confusing "cash flow" with "profit"?  
 

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desideratapoem said:   NYKnicksFan said:   S Corp is supposed to be pass through like LLC. Not sure, when you say other money can stay and remain untaxed - Are you suggesting that your dad is hiding taxes?Profit reinvested buying neighboring farms and equipment isn't taxed. In real estate, the $150k+ I make a year get's reinvested in new real estate and rentals and by the end of the year my business has grown a lot, and I don't have much or zero taxes to pay. You're partially correct about reinvesting in equipment (capital expense -- gets depreciated). You may even be right about farms. But I'm pretty sure it doesn't apply to all real estate, especially residential real estate (that's what you said you have).

I'm no accountant, but I'm pretty sure "profit" gets taxed before it can be reinvested. it sounds like you were cooking the books for the farm, and now you cook your own. Either that or you're not using the correct terminology. Makes one wonder what kind of accountant you were.

Skipping 4 Messages...
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NYKnicksFan said:   
desideratapoem said:   
NYKnicksFan said:   
desideratapoem said:   
fourchar said:   Where did you get these shares and when?

If this was a gift from your family/dad and now you're not on speaking terms, selling is not going to go well for you. With control of the voting they can and will easily screw you. Your accountant is an idiot and giving advice far over his head.

If you want to get in the family money you are likely going to have to make up with the family, not just try to cut and run.

  It isn't a "gift." It is a way for the owner to pass the farm to heirs with minimal estate taxes. An S Corp also allows my dad to pay much less taxes than if he was a sole proprietor. He gets to pay himself a minimal salary out of the millions he makes, and he only pays taxes on the minimal salary. The other money can stay in the biz and be untaxed. 

  
S Corp is supposed to be pass through like LLC. Not sure, when you say other money can stay and remain untaxed - Are you suggesting that your dad is hiding taxes? 

  Profit reinvested buying neighboring farms and equipment isn't taxed. In real estate, the $150k+ I make a year get's reinvested in new real estate and rentals and by the end of the year my business has grown a lot, and I don't have much or zero taxes to pay. 

  You don't have correct understanding of how S Corp and LLC works. They are pass through as indicated earlier. So, if profits were used to purchase another farm/equipments, it would have been taxed (Profit may have been passed to all share holders/members of S Corp and they paid taxes).  Same goes for your real estate. What you are suggesting that you don't have much tax/zero tax to pay is illegal. Only thing you are allowed is depreciation and expenses (Ones that are legal). It seems that either your accountant is doing some tricks or you are doing some tricks. You should better learn how taxes work before it gets late. Regarding your father, it seems that he may be taking minimum salary to grow his business (Putting profit back to work after taxes are paid) and this is perfectly legal. Actually, he is smart if he has done it. Maybe that is the reason he is wealthy (and you are not yet). 

  To be fair, there are numerous tax benefits for farms that most people in general wouldnt know about.  That includes me, so I'm not claiming she is correct, but there could be some additional twists that go against general understandings.

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