QUESTION
Should I get a proportionate amount in the excess of per year distributions if I am a 10% owner of the business?
Asked on Mar 01st, 2014 on Labor and Employment - California
More details to this question:
I am a 10% owner in an S Corp type business the other two partners are husband and wife at 50% & 40% the husband controls all paperwork and does not allow me access to it or the facts there of. They take in excess of $120,000 per year in distributions and give me nothing for the past three years. My question is shouldn't I be given a proportionate amount also?
3 ANSWERS
Perhaps they are taking home the bacon as salary, rather than corporate distributions, and after that, there is no profit remaining. If so, you would be entitled to the pro-rata amount of distributions they get, which would be 10% of zero. The fact that it is a S-corp is puzzling. Perhaps you should ask to see the tax return. Also, as a part owner of a S-Corp, do you not have to file that tax return with them? I suggest you speak with an attorney that handles such corporate finance cases. I do not. I suspect any one that is competent in this area of the law likely will charge more than you may want to pay.
Answered on Mar 05th, 2014 at 9:43 AM
Automobile Accidents and Injuries Attorney serving Knoxville, TN
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Baker Law Firm
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Probably, but a review of all the corporate history would be needed to make a determination. The method that is done is through a stockholder derivative suit where the minority stockholders sue the company for access to the information.
Answered on Mar 05th, 2014 at 9:11 AM
Commercial Contracts Attorney serving Boise, ID
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Peters Law, PLLC
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Yes, you should. You may want to report the company to the IRS. You also should consider hiring an attorney to file a derivative action and an oppressed shareholder action against the other owners.
Answered on Mar 05th, 2014 at 9:09 AM