Can 1 50% owner force the dissolution of S Corp?

bodell29 · #1 (**permalink**) 01-31-2009, 02:24 PM

I am an equal partner in an S corp. My partner has recently decided he no longer wants to be in business with me. He has proposed the split of clients, operations, debt, etc. We currently have $125K in debt and I do not agree with the timing or the proposed split of things.

Can he force me to do this?

TaxGuru · #2 (**permalink**) 01-31-2009, 08:59 PM

Your partner cannot force you to terminate the S Corporation. But, he can definitely withdraw as a partner. The timing consideration is not a relevant concern for the Tax Courts.

I suggest that you depart company and retain the S corporation as a 100% shareholder. There is no point to continue in the partnership with him considering his insistence that he wants to quit. It will not be a pleasant experience to continue to work for someone who does wish to appreciate your being a business relationship with him.