Corporate stock transfer with payroll question...

by Patricia
(Wilson, NC)

My Dad transferred 100% of the stock in his small, corporate business to my brother effective May 1st. He didn't want to wait till the end of the quarter. There are 2 employees on the payroll. Do I need to file separate state and federal withholding reports? One for April and one for May and June? Will I need to do the same for unemployment state and federal returns? The name of the business and the EIN # hasn't changed. I'll be filing form 8822-B but, other than that, I'm not sure what to do. Any information will be much appreciated!


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Hi Patricia!

As long as the EIN hasn't changed, you don't need to change how you report payroll.

All that has happened is a change in stockholders. If the business is what we call a C-Corp (regular corporation), there won't be any change to the Owners Equity section on the Balance Sheet, unless your brother paid your Dad more than the stated value of the stock.

If it's an S-Corp, however, you will change the Owners Equity section to reveal a new owner. For example, if you had an account called 'Owners Equity - Dad' you would transfer the account balance to a new equity account 'Owners Equity - Brother', or something like that anyway. :)

Hope that helps!

Kathy

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