Petoskey Stone Quarry Inc. (PSQ), a calendar-year, accrual-method C corporation, provides landscaping supplies to local builders in northern Michigan.
Petoskey Stone Quarry Inc. (PSQ), a calendar-year, accrual-method C corporation, provides landscaping supplies to local builders in northern Michigan. PSQ has always been a family-owned business and has a single class of voting common stock outstanding. The 500 outstanding shares are owned as follows:
\r\nNumber of shares
\r\nNick Adams 150
\r\nAmy Adams (Sandler’s sister) 150
\r\nAbigail Adams (Nick’s daughter) 50
\r\nCharlie Adams (Nick’s son) 50
\r\nSandler Adams (Nick’s father) 100
\r\nTotal shares 500
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Nick Adams serves as president of PSQ, and his father Sandler serves as chair of the board. Amy is the company’s CFO, and Abigail and Charlie work as employees of the company. Sandler would like to retire and sell his shares back to the company. The fair market value of the shares is $500,000. Sandler’s tax basis in his PSQ shares is $10,000.
\r\nThe redemption is tentatively scheduled to take place on December 31 of this year. At the beginning of the year, PSQ had accumulated earnings and profits of $2,500,000. The company projects current E&P of $200,000. The company intends to pay a pro rata cash distribution of $300 per share to its shareholders on December 1 of this year.
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