How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask USTaxAdvising Your Own Question
USTaxAdvising
USTaxAdvising, Accountant
Category: Finance
Satisfied Customers: 1236
Experience:  Professional with finance related questions.
58296935
Type Your Finance Question Here...
USTaxAdvising is online now
A new question is answered every 9 seconds

1120s corp member bought out 7/31/12 how to prepare K1 for

This answer was rated:

1120s corp
member bought out 7/31/12
how to prepare K1 for member? Did we cut off accounting at 7/31 & report his
& report remaining member with 12/31 data????

USTaxAdvising :

Hello,

Customer: Do you understand my question?
USTaxAdvising :

Yes - and no you do not cut off the accounting.

USTaxAdvising :

The S-corporation continues as if nothing happened and allocates the income/expenses to the selling shareholder based on his/her average shareholding on each day of the year.

Customer: What data should be on his K-1 if he was bought out 7/31/12?
Customer: our tax year ends 12/31/12
USTaxAdvising :

basically 7/12's of the income and expenses

USTaxAdvising :

unless all shareholders elect to allocate up to 07/31.

Customer: ok thank you
USTaxAdvising :

See page 21 of the IRS 1120s instructions here - www.irs.gov/pub/irs-pdf/i1120s.pdf‎


USTaxAdvising :

basically there are two options

USTaxAdvising :

1 - the default method is to allocate based on 07/12s of ownership

USTaxAdvising :

2 - if the other shareholders agree you can allocate all income/expense items up to 07/31. Then after 07/31 the selling shareholder would not get any income/expense items

USTaxAdvising :

make sense?

Customer: Yes thank you
USTaxAdvising :

excellent, glad I could help.

USTaxAdvising :

let me know if you have any further questions on it.

USTaxAdvising and other Finance Specialists are ready to help you

Related Finance Questions