An individual in business with an S Corp owner has been paid by him on 1099 for last 2 years. (I have had the account for the 2021 and 2022 returns.)  She says he made a verbal promise to make her a co-owner and she says she is owed 250K.  They both have business attorneys, but she says it is not litigious. 

In the meantime, the EDD is challenging the contractor classification. I have not talked with EDD nor seen EDD letters. Sounds like they want payroll taxes.  (Lesson to me to closely analyze worker classification prior to taking new clients. There were signs that they were playing loose with wages.)

She thinks she can argue that she was actually a shareholder rather than an employee.

She wants to get a certified valuation advisor to see if her possible ownership interest would compensate her for the 250K compensation.

She says she wants amended Scorp returns to reflect that she was a 50% owner. I explained that she'll have big tax liabilities from investment income. She countered that they agreed that she would only have the tax losses from operations. (Rental real estate (apt) management.)

I am not doing anything until an agreement is done and signed.