TaxMonkey
Level 8
05-02-2024
01:56 PM
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I am assuming that your LLC is being taxed as an S-corp.
If that is the case then this is all covered under IRC 1377.
The general rule for shares transferred during they year is that attributes of the S-corp will be prorated on a calendar day basis. So the original shareholder would get 264 / 365 of 20% the income of the S-corp and the succeeding shareholder will get 101/365 of 20% of the income of the S-corp.
However, there is an election to close the S-corps Books on the date of transfer and report the actual results for the periods 1/1 - 9/22 and 9/22 - 12/31 to the 20% shareholders. This requires the approval of all shareholders and the corporation.