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Is an S-Corporation stock sale exempt from form 8960?

amydeland
Level 1
Line 5C shows where the adjustment is made, but want to make sure..
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4 Replies 4
sjrcpa
Level 15

Did the seller actively participate in the S Corp's business?

Or were they a passive investor?


ex-AllStar
amydeland
Level 1

Yes, active participant....well kind of , he and brother owned but on the board and got a 1099 for services

so, yes active

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TaxGuyBill
Level 15

@amydeland wrote:

Yes, active participant....well kind of , he and brother owned but on the board and got a 1099


I believe they need to Materially Participate in it.  It seem doubtful that merely being 'on the board' would qualify for that.

Accountant-Man
Level 11

Why did he get a 1099 for services instead of a W2?

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