M-MTax
Level 12

Business & farm

I agree with @Mike9241; this will create issue for you particularly if the corporation is closely held.

 

Even if not, the equities will continue to be owned by you and, hence, you will have federal income tax liability for receipt of the dividends. You could then transfer the dividends to the C corp but that only creates another issue.

 

If the objective is for the corporation to take advantage of the dividends received deduction (DRD), that won't work in the given scenario. Otherwise, if there is a tax avoidance intent, that will again create issues with the IRS.

 

Speak with a local tax pro.