S Corp

5 replies
92 views

I have an S Corp. The ONLY income is paid with shares of a publicly traded stock (RSUs that vest upon grant). I prefer not to sell the shares. Can I simply transfer the shares as payment of wages / commission and/or a distribution of profit?

RobertB4444Answer

Alumni - Intuit

Thank you very much David for taking time to elaborate and ask questions.

I do not take a wage. In 2025 I was paid for some work late in the year and for my branding (company able to leverage my name and reputation). The portion paid for work was taken as a commission from my S-Corp rather than a regular wage since I do not do regular work. It was more than substantial enough to pay for the time I spent doing work.

I would prefer not to sell the stock that I'm granted as RSUs that vest and are tradable upon grant at this juncture. In recent past years, I was paid a small number of RSUs totally for branding - I did no work. So, I simply transferred all the shares to my personal account.

This year I had a small amount of work and was paid more for that late in the year - one time deal. From my personal cash, I paid both sides of FICA and estimated income taxes. I've always played by the rules in that I pay my taxes, but here, even though I'm paying the correct amounts I'm confused by the process.

Having the company be paid with stock is no problem. And, as @DavidD66 points out above, because you are the owner of the business paying yourself with the stock is not a problem.

The problem is that in order to have a single member S-Corp you are required to pay yourself what the IRS calls a "reasonable salary" which is to say a reasonable amount for your area to do the job that you do. This salary is required to be reported to the social security administration and have payroll taxes taken out of it and a W2 issued to you at the end of the year.

When you pay the payroll taxes to the IRS you won't be able to do that with stock so you will have to pay them with something. Maybe you can personally purchase some of the shares from the company for cash in order to infuse cash into the company?

Either way, it sounds as though you are not doing the payroll correctly and you need to get that taken care of soon.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

user17708643219

Level 8

Yes. You need to make sure you pay yourself a "reasonable wage" while taking the rest; or some of your other income as distributions of profit.

pmcwAuthor

Level 2

Thank you Max,

To ensure I follow correctly. My S Corp is paid only in shares of publicly traded stock from the company (my customer) that is paying for my branding and services. These are actually RSU (Restricted Stock Units) that vest and are immediately tradable. Since the S Corp does not have any cash income, I transfer all the shares to my personal account and allocate the appropriate value to wages, and the balance is taken as a distribution. I then take expenses as non-reimbursed business expenses.

Is this the appropriate and legal way to handle this situation?

DavidD66

Alumni - Intuit

In general, a compensation structure of strictly stock is not permitted under state and federal law. Employees must be paid at least the minimum wage in cash. However, there is an exception to this rule if the employee qualifies for exemption under the federal Fair Labor Standards Act (“FLSA”). To qualify for the exemption, an individual must (1) be employed in a bona fide executive capacity, (2) own at least a 20% interest in the business and (3) be actively engaged in the management of the business. Obviously the owner of an S-Corp would qualify.

If you are paying yourself wages with the stock and you have no cash income, how is the company paying the payroll taxes: Employer's share of social security and Medicare, unemployment insurance, and employee withholding of social security and Medicare? I don't understand what you mean by "I then take expenses as non-reimbursed business expenses" - can you clarify?

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"