Chapter 16 - § 16.4 • ESTATE AND GIFT TAX PLANNING WHEN CLIENT OWNS STOCK IN AN S CORPORATION

• Jurisdiction: Colorado

§ 16.4 • ESTATE AND GIFT TAX PLANNING WHEN CLIENT OWNS STOCK IN AN S CORPORATION

When a client owns stock in an S corporation that the client wishes to pass on to the client's family, the planner must be aware that there are significant limitations on the number and nature of the persons who may be shareholders of S corporations. LLCs, partnerships, and corporations may not be shareholders of S corporations.³¹ Accordingly, a client may not transfer shares of an S corporation to an LLC or partnership (including an LP or LLLP) established for estate or gift tax planning (or for any other reason). For a more detailed discussion of the requirements and limitations applicable to S corporations, see §...