I gave shares to my children. Can I still receive my old salary?
Compensation should reflect actual services, while the ownership transfer needs its own valuation and reporting review.
By AE Tax Advisors Team · Updated October 28, 2026
Compensation should reflect actual services, while the ownership transfer needs its own valuation and reporting review. A gift does not by itself require a proportional salary cut or justify moving compensation into distributions.
A business-owner scenario
A founder transfers minority shares to adult children but continues running the company full time. The children perform little work. The family needs to distinguish wages for services, distributions under ownership rights and the tax records for the gift.
Illustrative scenario, not a client result.
Work through the transaction
- Document continuing roles and compensation support.
- Review the gift's legal and tax reporting.
- Confirm shareholder eligibility and distribution provisions for the entity.
The mistake that changes the result
Paying nonworking family shareholders wages simply to shift income creates a different problem from a bona fide ownership gift.
Records that resolve the question
- Gift and transfer documents.
- Valuation.
- Payroll records.
- Governing agreement.
The decision to document
Ask counsel and the advisor for a combined ownership and compensation plan. Preserve the transfer-date basis information and assign future reporting responsibilities before the next distribution or payroll cycle.
Which fact changes the answer?
The children may own economic rights without becoming employees. Preserve that distinction when planning wages and distributions. If they later join the business, compensation should be reviewed from their own duties rather than assigned from the gifted ownership percentage.
Explore changing ownership advisory · Discuss your situation with AE Tax Advisors
Related owner questions
- A new investor diluted my shares. Does my shareholder loan shrink too?
- My partner is leaving with a negative capital account. What happens?
Sources and scope
General educational information prepared with AI assistance. No individual professional review is represented. Apply the relevant tax-year rules to the actual records. Editorial policy · AI disclosure.