Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.
Since you sold the S-Corp stock the sale belongs on Schedule D as a long-term capital gain (assuming you held the stock for at least a year).
The selling price of $150,000. is your gross proceeds and you look to your own records or the K-1 to determine your adjusted tax basis in the S-Corp stock. Your accountant (for the S-Corp) should be able to assist you with determining your adjusted basis.
The final tax liability will not reduce the $150,000., selling price anymore than any other taxes that you paid along the way.
Thank you for getting back to me so quickly. Is the basis adjusted by Retained earnings, contributions, draws and non-deductible items? I want to have an understanding of how an accountant would calculate the adjusted basis.
Also - for bookkeeping purposes, how do I make an entry for the sale to reflect a clean set of books moving forward for the new owner?
Thanks again -I really appreciate your time.
Sorry, but that is way beyond the scope of your original question & would be impossible to answer that question without having your tax returns, acccounting/bookkeeping history etc., I mean we did go to school for this stuff....... :)-
In theory, if everything has been accounted for properly along the way, the books of the S-Corp are not affected by a sale of stock from an existing shareholder to a new shareholder any more than any other company's books are adjusted for sales of stock on the open market..........
You're going to need an accountant familar with S-Corp accounting to sort this all out for you; who is doing (has done) the s-corp returns? That's where to go for your answers; he/she will have the records & know how to use them..........
Please remember to click on the green "ACCEPT" "ICON" & thanks again for using our service.