Peter and his wife, Alice, own all the stock of Galleon Corporation. Galleon made its S election 12 years ago. Peter and Alice sold one-half their Galleon stock to a partnership owned by Rob and Susan (not husband and wife) at the close of business on December 31 of the current year for a $75,000 profit.

What are the tax consequences of the sale transaction for Peter and Alice? For the corporation?

As Peter and Alices CPA, do you have any advice for them if all parties would like the S election to continue?