Where do I input the stepped up basis for a property sold by a deceased shareholder?

[nicole]

Shareholder dies and property held in the S-Corporation is sold. Where do I report his stepped up basis as of the date of death? I am not sure if it is reported under the dispositions on the corporate return (It only affects one shareholder, not the others) or is it reported on the individual return?

[PhoebeRoberts · Accepted solution]

There's no 754 election for S-corps. The decedent's estate has a step up in the basis of the stock, not the underlying assets. The transaction you describe, assuming the S-corp isn't filing a final return, isn't reported on either the 1120S or the 1041 or anyone's1040.

[abctax55]

Is this the right time to discuss why it isn't a good idea to put real property in a corp?

[nicole]

The trust holds the assets.

[nicole]

There is a step up in basis if the assets of the corp are sold in the year of death.

[abctax55]

"...Shareholder dies and property held in the S-Corporation is sold"

Per your statement, the CORP holds the assets, the *trust (first mention)* holds the stock.  BIG difference.

And thanks for the no vote.

[IRonMaN]

I guess this isn't a good time to discuss putting real property into a corp :wink:

[abctax55]

LOL....guess not.  Perhaps I should edit that to add " /s".