You do not indicate whether you wish to buy out the other partner, continue with the business or simply liquidate and dissolve your business. Nonetheless, assuming you do not have a shareholder's agreement (or buy-sell or other form of agreement between you and the other shareholder), ultimately, your exit strategy comes down to negotiations between you and the remaining shareholder. However, there are some constraints (or obstacles) you will have to deal with. For instance, your company is an S Corp and there are very rigid rules and predetermined tax consequences to what happens upon liquidation or dissolution of your corporation.
I suggest you speak with a business attorney and discuss your options. My firm and I handle clients with your situation often, and we would be happy to talk with you.
This answer is for informational purposes only and is not intended to be legal advice nor does it establish an attorney-client relationship. You should consult a local business lawyer to obtain legal advice that is tailored to your circumstances and facts. Good luck to you.
This is strictly a matter of negotiation and your sense of what her interest is truly worth. Throw all the other stuff out for the moment and ask yourself what would someone pay for her interest. Then you need to determine how bad you want to get rid of her and for this you may have to pay a premium above what you think her interest is truly worth. After that you then need to determine the best way to do this tax-wise. Take the prior attorney's advice and get with an experienced business/tax attorney to advise and assist you in this matter.
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