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USTaxAdvising, Accountant
Category: Finance
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1120s corp member bought out 7/31/12 how to prepare K1 for

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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 :


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 -‎

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.

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