Background:

Recently I asked a question about how to buys S corp shares with IRA
dollars.  The answer I received was that an ESOP needed to be created.
 Our corporate attornies said that that would be too much paperwork
for a small firm.  They thought the route might be a QSST (Qualified
Sub S Trust) and that may be the mechanism use IRA dollars to buy S
Corp shares without adversely affecting the S Corp status.  Please
explain how I may (step-by-step) do this.  The goal is to use SEP-IRA
dollars to purchase S Corp Shares for long term.  If the QSST is not
the way to go, any alternative legal approaches would be greatly
appreciated.

Thanks,
R

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Clarification of Question by dogmania-ga on 07 Jun 2004 06:39 PDT

If an IRA legally holding S corp shares is costly and difficult to
administer (ESOP), and if a QSST is unable to allow the IRA to hold
the S corp shares, is it better to convert to a C corp.  I understand
that there is no issue with an IRA holding C corp shares since the
taxes on income are paid by the corporation and then the individual. 
Most small firms don't like to be C corps, because of the double
taxation issue, but if there is to be a buyout, this seems to be a
more straight forward means of having the IRA capture some of the
buyout dollars for retirement savings.