Stock sales_Schedule K-1 (1120S)

Forum|Forum|3 years ago
February 9, 2023
1 reply
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Hi,

One of our clients made the stock sales of her s-corporation on June 30th, 2022.
From January to June 2022, my client had a net loss of $170,000; however, from July to December, when the new owner took over the business, there was a net profit of $100,000. Therefore, the total income of this business in 2022 was -$70,000.

Do I need to do 50% and 50% for the net loss?
Or is there a way to claim -$170,000 for a previous owner on her scheduled K-1 and $100,000 on the new owner's K-1?

Thank you!

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Best answer by dkh

Had same situation, although it was a 2018 return, and yes, you will have to do a lot of overriding

Here is what I overrode .. your situation may be different

on each shareholders K1: beginning and ending date
on each shareholders K1: all amounts in Part III
on K1 worksheet: ownership percentage for period of ownership (was only way to get it to flow to the K1 )
Schedule K reconciliation columns for 12a, 13g, 15a, 16c, 16d (may be different on 2022)
Weighted average ownership percentage worksheet: Shareholders percentage

Don't forget to attach the 1377 election and include the election verbiage at top of each K1

I'm sure that's not covering everything for a 2022 return but it gives you an idea.

Good luck

sjrcpa

Level 15

The default is allocate on a per share per day basis.

If both parties agree, a cut off the books election can be made.

The more I know the more I don’t know.

S

SKCPALLCAuthor

Level 2

Thank you so much for your response!
Both parties have agreed on a cut-off-book election, but I do not know how to apply this to the program.
Can I override the amounts on K-1s?

dkhAnswer