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Question: burt is the custodian at quaker inn an s corporation...

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Burt is the custodian at Quaker Inn, an S corporation that has paid him bonuses over the years in the form of shares in the corporation. Burt now holds 276 shares in Quaker Inn.

While listening to a television debate about a national health care plan, Burt decides that the company's health coverage is unfair. He is concerned about this because his wife, Dora, is seriously ill.

During the second week of December, Burt informs Quaker's president that he would like a Christmas bonus of $75,000 cash, or else he will sell 10 shares of his stock to one of his relatives, a nonresident alien. The resulting loss of the S election would trigger about $135,000 in federal corporate income taxes for the current year alone. How should Quaker Inn's management respond to Burt's threat? From Burt's point of view, do you see any unintended consequences if he follows through on his threat?

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