This was a TAX issue for those 29 investors simple and to the point!!A C corporation is distinguished from an S corporation, which generally is not taxed separately. Most major companies (and many smaller companies) are treated as C corporations for U.S. federal income tax purposes. Shareholders of a corporation may elect to treat the corporation as a flow-through entity known as an S corporation. An S corporation is not itself subject to income tax; rather, shareholders of the S corporation are subject to tax on their pro rata shares of income based on their shareholdings.[1] To qualify to make the S corporation election, the corporation's shares must be held by resident or citizen individuals or certain qualifying trusts. A corporation may qualify as a C corporation without regard to any limit on the number of shareholders, foreign or domestic. Look out here comes Larry Panik!!.Financial statements
Corporations are required to issue financial statements in the United States. Financial statements may be presented on any comprehensive basis, including an income tax basis. There is no requirement for appointment of auditors, unless the corporation is publicly traded and thus subject to the requirements of the Sarbanes-Oxley Act.
Distributions
Any distribution from the earnings and profits of a C corporation is treated as a dividend for U.S. income tax purposes.[5] "Earnings and profits" is a tax law concept similar to the financial accounting concept of retained earnings.[6] Exceptions apply to treat certain distributions as made in exchange for stock rather than as dividends. Such exceptions include distributions in complete termination of a shareholder's interest[7] and distributions in liquidation of the corporation.[8] Tax rates... C Corps are subject to double taxation unlike LLCs.
Limited conversion alternatives. Barring unusual circumstances, under present law, there is no tax effective way to change the status of C Corp to an S Corp or LLC to relieve the double taxation burden.
Larry Panik tried to rewrite the Tax Law with the BK!!.I say subpoena the tax records for the dates in question from everyone, even the 29 investors that will clear this whole mess up. Everything else that is being said here from the bashers is only HEARSAY so lets subpoena ALL RECORDS, any objections?. And see what the cost would of been back then for the 29 investors;There was a risk of double taxation. Todays rate is 35% up to $350,000 not sure what the rate was back then.Maybe Bruce Hoyt could clear that part up on the witness stand,since he was the financial person!!.
