1120-S K-1 on Personal Return

[tbamaze]

I have a client that has a K-1 from an LLC that they switched to an S-Corp for 2023.  They are the only Shareholder. They were paid a salary and have a W-2 and they have a K-1 with a loss.

Confirming that I need to enter on their personal return the W-2 and the K-1 loss?  Proconnect is asking for their "Adjusted Basis at the beginning of the year"?  I asked the client to reach out to their accountant who prepared their K-1. Hoping the accountant can assist with that amount.  

I have two questions:

1) Are the W-2 and K-1 loss the only items that need to be entered.  I am more familiar with Schedule C and entering all income and expenses directly on it.

2) For the "Adjusted Basis at the beginning of the year" is it possible it can be zero since this is first year as S-Corp? 

[sjrcpa]

1. You enter all the line items from the K-1.

2. Not likely Basis is zero, but possible.

[tbamaze]

Confirming I do not enter the W-2 partner received in addition to K-1?

[abctax55]

The W-2 has to be entered, too.

Those (& other wages) were deducted in arriving at the K-1 income or loss.

[qbteachmt]

"Confirming I do not enter the W-2 partner received in addition to K-1?"

You stated this is the only shareholder. Is there a partner? Your shareholder is really shareholder-employee, but there are rules that treat the person differently than a regular employee, as well.

Are you aware of the changes for S Corp vs LLC? For instance, no guaranteed payments, no Unreimbursed Expense claims (UPE deductions) on the 1040, no Draws (distributions are pro rata to shareholders), no business use of personal vehicle on the 1040, any personal use of a company-owned vehicle is taxable through payroll, health insurance premiums paid by the corporation are run through payroll, etc. That's why you see details on the K-1.

And when your taxpayer has a W2, you enter it.