Are there any reasons not to give wife stock in my company?

Question

I own 100% of my S-corp stock. Because of a few planning changes I am giving my wife 10% of the shares. Are there any negative consequences from doing this? (i.e. does this open her up to liabilty issues in case the company is sued?)

Answer 1

IT does open her up to some liability, but since you are married, and you are the only other shareholder, if something happened to you it would affect her anyway. Since the S-corp is merely a pass-through entity, your tax return could be affected if you file seperately or if you need to make allocations for each spouse for some reason. Other than that it should be OK. Make sure you speak with an experienced ta professional when the time comes.