Tax Facts

J—Disability Buy Out Stock Redemption Agreement

A disabled corporate shareholder/employee cannot be carried for very long in a small business; hence the need for a disability buy-out arrangement. For example, if an employee/shareholder becomes totally disabled for a period of six months, on the first day of the seventh month the employee/shareholders stock is redeemed by the corporation at the disability buy-out price.

Disability Buy-Out Stock Redemption Agreement PDFDownload

Cross References - Concepts Illustrated

Cross
Purchase Agreement

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