[BUYING AND SELLING REAL ESTATE IN MICHIGAN]
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2. The filing of form 2553 with the Internal Revenue Service. 3. Only one class of stock. 4. A maximum of 100 shareholders. 5. Only certain individuals or entities may be shareholders. Shareholders may be individuals, certain trusts, and estates, and may not be partnerships, corporations, or non-resident aliens. 5. Directors and officers owe a fiduciary duty to the corporation. They must: (i) perform their duties in good faith, (ii) with the care an ordinarily prudent person in a like position would exercise under similar circumstances, and (iii) in a manner he or she reasonably believes to be in the best interests of the corporation. MCL 450.1541a(1). Shareholders generally do not owe a fiduciary duty to other shareholders (unless the duty is set forth in a shareholder agreement). 6. Advantages 1. Shareholders have limited liability for acts of the corporation. 2. Shareholders can generally freely transfer their stock (unless subject to a shareholder agreement stating otherwise). 3. S corporations receive pass through income tax treatment (no double taxation) 4. S corporations may lead to savings on self-employment taxes.
7. Disadvantages 1. C corporations are subject to double income taxation. 2. A C corporation cannot pass through its losses to its shareholders. IRC 172. 3. Unlike an LLC, S corporation allocations of income or loss are rigid. 4. The Michigan Business Corporation Act is more
stringent than other applicable entity statutes in terms of requirements applicable to corporations. activities require shareholder approval including, amending the Articles of Incorporation (except under certain circumstances) (MCL 450.1611(3)), adopting a plan of merger or share exchange (MCL 450.1703a(1)), and selling all or substantially all of the corporate corporation’s assets outside of the ordinary course (MCL 450.1753). Most changes require approval from the majority of shareholders and may require approval from an affected class of shareholders. Shareholder agreements may require approval from a greater percentage of shareholders for certain actions.
5. Certain
VII. FORM OF DEED A. The common deed in Michigan is the “warranty deed” where the seller warrants title. The “Special Warranty Deed” (sometimes called a “Covenant Deed”) is becoming more accepted and
ILN Real Estate Group – Buying and Selling Real Estate Series
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