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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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a subchapter s has a $50,000 loss for 2012, on december 30,

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a subchapter s has a $50,000 loss for 2012, on december 30, 2012 872 shares were sold in a new offering to a new shareholder. the present shareholders from 1/1/12 to 12/30/12 held 1,000 shares. how do you allocate the loss

Hi and welcome to JustAnswer:


The 2012 loss is allocated on a % ownership per day. Thus the original owner will receive 99.876% (100% * 364/365 + 1000/1872 * 1/365) and the new shareholder will be allocated .124%.

This method is shown on page 22 of the instructions for Form 1120-S. See link below.

http://www.irs.gov/pub/irs-pdf/i1120s.pdf

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Customer: replied 3 years ago.

if the 872 shares were $1 par and sold for $200,000 how would the allocation change if $50,000 was actually paid in 2013 and $150,000 was paid in 2012 but the full stock certificate was issued in 2012, so there is a receivable due. does the fact that some was paid in 2013 impact the holdings at 12/31/12

Hi jc -

If the full certificate was issued in 2012, will all rights and powers, there is no change in allocation. The journal entry would have been debit cash $50,000, debit stock subscription receivable $150,000 and credit capital stock $872 credit additional paid in capital $199,126.

The allocation would be different if the shares were issued upon payment.

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