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homedream(古风)

Accounting:
1. Repurchase the shares:

Dr. Common shares (paid-up capital) xxx,
Dr. Contributed surplus xxx
Cr. Cash 10,000

2. Give the shares to Mr. A
Dr. Compensation expenses 10,000
Cr. Common shares 10,000

Tax consequences:

(1) For seller, there is deemed dividend subject to gross up. There could be capital gain (loss) if he acquired the shares from other shareholders.

(2) For company, the paid-up-capital amount could be affected and PUP for each other shareholders could also be changed.

(3) For Mr. A, there is no taxable benefit to be reported in the year he gets the shares; If the shares are disposed after holding at least two years, 50% of the 10k is added to his income of that year, difference between selling price (if higher than 10k) and $10k would be a capital gain which could qualify for life time capital gain exemption provided shares were QSBCS.

(#69721@41)
Last Updated: 2012-12-7

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请教大家：公司的一个SHAREHOLDER转让一部分股票给员工A，价钱$10K，是由公司付钱， -fiona88(Fiona88); 2012-12-6 {211} (#69695@41)
等于是说这个股票就是送给他了，因为这个SHAREHOLDER 有欠员工B $1K，所以先是$1K给员工B，另外$9K给这个SHAREHOLDER。请问这样做是不是合理？这个买卖的股票所有权到底属于谁的？我在QUICKBOOKS 上应该怎么做这个ENTRY？谢谢！

Ask the following questions then you can get the pictures: -homedream(古风); 2012-12-6 {585} (#69704@41)
1. Who is the buyer of the shares on the agreement? The company or Mr. A?
2. If the buyer is Mr. A and Mr.A now becomes a shareholder, then would be quite straight,10k is a taxable gift for Mr.A in that year. This is also simple for the seller in tax treatment. Based on your information, looks fall into this situation.
3. If company is the buyer (redeems the shares) and then re-issue the same shares (or grant option at $0, Mr. A finally becomes the shareholder), accounting treatment is different, and tax consequences would be more complex for the seller, the company and Mr. A.

The purchaser is the company. Mr.A finally will become a shareholder as the agreement says Mr.A will get stock certificate. -fiona88(Fiona88); 2012-12-7 {146} (#69718@41)
I don't know how to make entry in QuickBooks and don't even know about the accounting treatment and tax treatment on the company and transferee.

see below -homedream(古风); 2012-12-7 {923} (#69721@41)
Accounting:
1. Repurchase the shares:

Dr. Common shares (paid-up capital) xxx,
Dr. Contributed surplus xxx
Cr. Cash 10,000

2. Give the shares to Mr. A
Dr. Compensation expenses 10,000
Cr. Common shares 10,000

Tax consequences:

(1) For seller, there is deemed dividend subject to gross up. There could be capital gain (loss) if he acquired the shares from other shareholders.

(2) For company, the paid-up-capital amount could be affected and PUP for each other shareholders could also be changed.

(3) For Mr. A, there is no taxable benefit to be reported in the year he gets the shares; If the shares are disposed after holding at least two years, 50% of the 10k is added to his income of that year, difference between selling price (if higher than 10k) and $10k would be a capital gain which could qualify for life time capital gain exemption provided shares were QSBCS.

请问PUP 是什么？Contributed surplus是多少钱？经验有限，还请赐教，谢谢！ -fiona88(Fiona88); 2012-12-10 (#69751@41)

paid up capital, it is a taxation term. -criss(criss); 2012-12-10 (#69760@41)

谢谢二位！ -fiona88(Fiona88); 2012-12-11 (#69769@41)

@Las Vegas

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