This adjustment would save the owners from unfavorable tax consequences, and the new entities that were created would simply be ignored.Can anyone tell me why, if it was the intention from the outset that these entities would be held within the S-corp holding company, the LLC operating agreements were not created with that 100% S-corp ownership in the first place, rather than being created with 50/50 ownership of husband and wife?Disordered, untimely paperwork was cited as the cause in some cases of unintentional backdating.Initially, lax enforcement of the reporting rule was also blamed for allowing many companies to sidestep the rule adjustment that stemmed from Sarbanes-Oxley.This process makes the granted option "in the money" and of value to the holder.This process occurred when companies were only required to report the issuance of stock options to the SEC within two months of the grant date.This adjustment to the filing window came with the Sarbanes-Oxley legislation.
This would have reduced tax return preparation time for year 2012 by making it possible to file just one consolidated return, and this arrangement would have made it possible for the profits and losses of these six entities to be netted against each other within the holding company S-corp.
First and most important: is it illegal or unethical to now create the amendment that should have been created early on in year 2012, and to make it effective as of the first of the year (backdate it), thus making it possible to file a consolidated return?
Likewise, the same question for backdating similar amendments for the entities that were startups later on in year 2012?
This is the granted option that would be reported to the SEC.
The act of options backdating became much more difficult after companies were required to report the granting of options to the SEC within two business days.
The holding company S-corp would have issued just two K-1s, one to the husband, and one to the wife; they are the owners of the S-corp, 50/50.