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Hawaiian Memories Case Analysis

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Words 943
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Facts
The Hawaiian Memories, Inc. was formed in 2007 as a C corporation, and it deals in specialty tourism products. The two main incorporators of the company own 1,000 voting common stock and 100 preferred stock in shares each. The company’s eight employees own 500 nonvoting stock collectively. Two of the eight employees own 100 shares each and the other six own 50 shares each, totaling to 500 nonvoting stock. Several of these employees have worked for this company for certain amount of years and managed to purchase the shares when they were offered. All of the company’s shareholders are Hawaiians except one who is of Swedish origin. Besides the owners and the employees, the company has another stockholder, the Plantation Sugar Partnership that owns 500 nonvoting common shares.
Issue …show more content…
As an S corporation, they will be liable to pay income tax as stipulated in form 1120S, estimated tax and employment taxes which include social security, Medicare, depositing, federal unemployment tax and income tax withholding (S Corporations | Internal Revenue Service). The corporation will also be required to meet the requirements in order to qualify for S corporation status. These requirements are: it must be a domestic corporation, have allowable shareholders, not exceed 100 shareholders and have one class of stock. The main shareholders should not be non-residents; therefore, Angie will have to move back to Hawaii.
Facts
The two main shareholders of the company Bob and Angie earn a salary of $150,000 annually. All the company employees and the shareholders are also provided with an accident and health insurance coverage. Besides the cover, the corporation contributes 10% of every employee’s salary yearly to a pension plan as well.
Issue and Conclusion 3
Are there going to be any restrictions on the shareholders of the Hawaiian Memories,

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