Tax

Have a Tax Question? Ask a Tax Expert

Ask an Expert,
Get an Answer ASAP!

Tax
This answer was rated:

we closed our S-Corp in 2012 and we are filing our final K1.

One of our investors is...
we closed our S-Corp in 2012 and we are filing our final K1. One of our investors is looking for a final K1 from us even though his ownership became 0% as of 2010. Without a final K1 he feels his losses from investment can not be claimed in his return. Since he ceased to be a shareholder since Aug 2010, how do we get him a final K1 showing his losses? How do we fulfill his request? thanks
Show More
Show Less
Ask Your Own Tax Question
Answered in 3 hours by:
5/18/2013
USTaxAdvising
Category: Tax
Satisfied Customers: 1,237
Experience: US Taxation specialist.
Verified

Hello,

Thank you for using justanswer. I can assist you with your questions today.

 

If he ceased to be a shareholder in 2010 and 2010 was his final year of allocation of income/losses then his 2010 Schedule K1 should have been marked as final at the top of the K1 (there is a little box to check). I think the most accurate remedy would be to amend the 2010 Schedule K1 and mark the K1 as final. (Don't forget to mark the box on the K1 as amended as well) You will need to send in the amended K1 with an amended 1120S form. (see page 6 here - http://www.irs.gov/pub/irs-pdf/i1120s.pdf)

 

If the investor is willing to accept a 2012 Schedule K1 being marked as final that would work as well. It just won't provide the investor with the correct year of disposition of his investment.

 

The investor needs the K1 marked as final because it provides proof that he disposed of his investment.

 

Please let me know if you have any further questions.

 

Best regards,

Ask Your Own Tax Question
Customer reply replied 4 years ago
To your response "If the investor is willing to accept a 2012 Schedule K1 being marked as final that would work as well. It just won't provide the investor with the correct year of disposition of his investment." ,

Is it legally ok to provide an investor with 2012 Schedule K1 marked as Final even though he ceased to be an investor as of 2010? Please note that we have closed the S-corp in 2012 so this has to be final K1 for all of us.
Is it legally ok to provide an investor with 2012 Schedule K1 marked as Final even though he ceased to be an investor as of 2010? - No it is not legally Ok from an income tax/IRS standpoint, I should not have mentioned the 2012 remedy. (some folks would do it just to free themselves of the administrative burden of filing an amended 1120S).
Ask Your Own Tax Question
Customer reply replied 4 years ago
I am still confused. It will probably help you give me clarity if i gave you some specifics here. The investor invested 100k into the S-Corp in 2009 and purchased 'x' number of shares. In August 2010, the company refunded 60k to the investor (based on mutual agreement) and the investor signed a rescission and release agreement through which the investor surrendered all the shares.

Now that the S-Corp is closed, the investor wants a Final K1 which shows the loss of 40K of his investment. Here is my dilemma:

1. When i use the TaxAct software to provide a Final K1 for the investor, it does not allow me to give a K1 for the investor because he was not a shareholder in 2012. perhaps, One option as you indicate is to amend his 2010 K1 and also call it "final k1"?

2. Even if we try to prepare a final K1 manually for the investor, which line numbers in Federal K1 do we indicate in the investor's K1 his 40k loss against his original investment of 100k?

thanks in advance. I will sigh a big relief with some clarity.

1. When i use the TaxAct software to provide a Final K1 for the investor, it does not allow me to give a K1 for the investor because he was not a shareholder in 2012. perhaps, One option as you indicate is to amend his 2010 K1 and also call it "final k1"? - If he was no longer a shareholder in 2010 then the 2010 K1 should have been marked as final. You can file an amended 2010 K1 for to rectify this oversight.

 

2. Even if we try to prepare a final K1 manually for the investor, which line numbers in Federal K1 do we indicate in the investor's K1 his 40k loss against his original investment of 100k? - You do not show his 40K loss. That is his basis tracking responsibility. He put in 100K and you returned 60K and closed out his shares. The company is not required to disclose the 40K loss to the investor, it is the investor's loss, not the company's.

 

Make sense?

 

best,

Ask Your Own Tax Question
Customer reply replied 4 years ago
Thanks. Yes it makes sense. The investor happens to be a friend. How does he claim his 40k loss in his return since our amended k1 will not help him there?
He feels our company owes an equivalent of 1099 for him to claim the loss in his return since our scorp is closed.
Thanks again

He claims the loss as a short term capital loss on schedule D. He bought stock for 100K and only received 60K back (+/- any allocation of income/losses) thus the 40K is a capital loss for him.

USTaxAdvising
Category: Tax
Satisfied Customers: 1,237
Experience: US Taxation specialist.
Verified
USTaxAdvising and 87 other Tax Specialists are ready to help you
Ask your own question now
Ask USTaxAdvising Your Own Question
USTaxAdvising
USTaxAdvising
USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1,237
1,237 Satisfied Customers
Experience: US Taxation specialist.

USTaxAdvising is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,300 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,338 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

Robin D.

Robin D.

Senior Tax Advisor 4

13,980 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,651 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

R. Klein, EA

R. Klein, EA

Enrolled Agent

1,839 satisfied customers

Over 20 Years experience

< Previous | Next >

Related Tax Questions
I would like to open a business:to prepare tax returns for
Hello! I would like to open a business:to prepare tax returns for non resident,more exactly for students who come on a J1 -Visa ("Summer Work and travel" programme=where they work for aprox 3 months i… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I used turbot to file 2016 tax return and I have a pdf file
I used turbot to file 2016 tax return and I have a pdf file of the return however every time I try to recall my turbo tax file online tney can't find it. I've tried multiple times to retrieve and /or … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,777 satisfied customers
Whats the best tax software to file personal and business
Whats the best tax software to file personal and business taxes. we started our firm last year and we have very few clients we would like to pay per tax file because we have about 30 clients only.What… read more
Dr. Fiona Chen
Dr. Fiona Chen
President
Ph.D.
496 satisfied customers
What are the forms for reporting Rental Income to the IRS on
What are the forms for reporting Rental Income to the IRS on foreign properties - we collect each month? Is this filed separately from our personal returns?… read more
Chad EA, CFP ®
Chad EA, CFP ®
IRS Enrolled Agent, CFP(R),
Master\u0027s Degree
1,061 satisfied customers
I have a capital loss carryover from GM bankruptcy that will
I have a capital loss carryover from GM bankruptcy that will not be retired yet by some capital gain from sale in 2017. Can I use the balance of carryover from a sale in 2017 even tho I may not need t… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
Is there a form to file with the IRS for tax periods that
Is there a form to file with the IRS for tax periods that have ran past the statute of limitations from the date of assessment … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Lev, I am still working on preparing the final return for
Good morning Lev, I am still working on preparing the final return for this particular client. Per your instruction, I converted the loan to the shareholder to paid in capital and on the balance sheet… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I am preparing 6 years of tax returns, I have an IRS Notice
I am preparing 6 years of tax returns, I have an IRS Notice 2014-7 that states that states "IHSS wages received by IHSS providers who live in the same home with the recipient of those services are als… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
On Form 706 Schedule D, if the proceeds were paid directly
On Form 706 Schedule D, if the proceeds were paid directly to a funeral home to pay for funeral expenses should the face value of the policy be included on this schedule? Also should the funeral expen… read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
I used to work for Hewitt as a tax preparer and figured
I used to work for Jackson Hewitt as a tax preparer and figured while I carried a simple insurance for "error and omissions" they had a larger umbrella insurance to cover me for larger million dollar … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Use your tax software to complete this project. As your
Use your tax software to complete this project.As your Comprehensive Tax Return Final Project, you'll be preparing the 2016 tax return for Kevin Kent and ***** *****. The Kent's Intake Sheet is below.… read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
Regarding Federal tax income Form 4952, should I expect my
Regarding Federal tax income Form 4952, should I expect my client to provide me a form to help me fill out line 1 for "investment interest expense paid"? And if so what is the form number?… read more
abci168
abci168
Principal
27 satisfied customers
I used the online version to file my 2016 tax return and I
Good morning I used the online version to file my 2016 tax return and I am not sure how I missed filing my wife's return. I now need to file a return for her and would like to know if I can add her to… read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,777 satisfied customers
I am preparing a form 8802 for an LLC that will be filing as
Good morning. I am preparing a form 8802 for an LLC that will be filing as a Partnership on Form 1065. For 2016 this entity was a Single Member LLC and two Partners were admitted October 1, 2017. … read more
Barbara
Barbara
Enrolled Agent, Paralegal
3,777 satisfied customers
Lev, I am preparing federal unfiled tax returns for a client
Good morning Lev, I am preparing federal unfiled tax returns for a client of mine. I am also ready to finalize the 2014 tax return and there is an NOL created on his return. The client has already fil… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have prepared my return for 2016 using h&r block software.
I have prepared my return for 2016 using h&r block software. However, I have one question on how to properly account for AMT adjustment. I bought some stock options in 2015, and because my option pric… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
What form is used on the fed 1120s to changed shareholder
what form is used on the fed 1120s to changed shareholder shares from one to another person and state and NYC forms as well… read more
Chad Schoch
Chad Schoch
Bacehlors of Business Administration
20 satisfied customers
THE irs STATED THAT TE TAXCALULATED ON SCHEDULE D WAS
tHE irs STATED THAT TE TAXCALULATED ON SCHEDULE D WAS INCORRECT . i CAN NOT ACCERSS dD. p;EASE DVISE HOW I CAN ACEESS THE SCHEDULE … read more
NPVAdvisor
NPVAdvisor
CFP Licensee and Practitioner
Master's Degree
180 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x