Hi Terry,

Yes S-Corporations do issue W2s all the time.  Matter of fact, they are required to pay reasonable compensation to the shareholders.  This client was a 3% shareholder in a large medical practice and was ready to retire.  The S-Corporation purchased his shares back for $65,000.  The $120,000 paid over six months was coded on his W2 as deferred compensation and was in addition to his regular compensation through 04/30/21 (the date of the stock redemption).  He also received a K-1 for the year for his share of profits through 04/30/21.  

Thank you in advance for any insight on the matter.