Buying out S-Corp partner's shares. Send him 1099?
I'm a 50/50 partner in an S Corp and my partner is retiring. I'm buying his shares for exactly half the balance of our corporate bank account (the business is floundering so we both agreed it was fair to assess the business at the value of the assets, so he gets half).
So we have a stock transfer agreement signed, and I've taken over everything in the business. Now comes to payment.
1) Can I simply do a distribution to him in this amount? The money in the bank has already been taxed, so it shouldn't be a taxable event for him? I'm fuzzy on this.
2) If I write him a check from my personal account, separate from the corporation, should I be sending him a 1099? If I don't, am I missing out on a tax benefit?
Thanks for your help.