Creating a K-1 for an S-Corp

[hcliston]

Hi --

My client owns an S-Corp. I have been waiting for him to send me the K-1 so I can enter the info into ProSeries.  Now he tells me he expects ME to prepare the K-1.  He gave me a rough spreadsheet with some business expenses on it.

I have never created a K-1 before. 

Is there a way to do this in ProSeries? 

Or do I need to go back to him and tell him HE has to get me a K-1 so I can finish his personal tax return?

Thanks very much.

[Intuit_AleeW]

ProSeries does support the creation of 1120S Returns in the ProSeries Professional program. Here is a link to general information on preparing an S-Corporation return. General information about Form 1120S in ProSeries Professional

[dkh]

A 1120S return needs to be prepared which produces the K1.  You cannot create a K1 from a rough spreadsheet.    

File an extension until your client understands the process for owning and preparing a return for an SCorp

[hcliston]

DKH,

Thank you. I very much appreciate how quickly you responded.

But I'm afraid I don't understand.

Are you saying someone needs to produce an 1120S return separately?

Or can I do that from within his individual return, within ProSeries Basic?

Thank you,

Heather 

[dkh]

Yes a 1120S returns needs to be prepared which is separate from the individual return.

If you have never prepared a SCorp return then it is probably wise to find someone with experience to prepare it.

[qbteachmt]

A corporation is its own entity. Think of how your taxpayer and his neighbor don't file taxes together. The same is true of an S Corp. It files its own tax return. The information about the entity is passed through to the shareholder(s). That's why it is called a pass through entity. That's why all the shareholders are waiting on their K-1, from the preparation of the S Corporation's tax return. They use the K-1 to prepare their own 1040. That is true for any S Corporation or partnership where your taxpayer is a shareholder (participant in the corporation) or partner/member.

And the other issue is payroll. A shareholder that also is an employee (works for the entity) is supposed to be paid through payroll. That means you would have a W2 for them.

"He gave me a rough spreadsheet with some business expenses on it."

Someone is supposed to be keeping all of the business' financial data, running payroll, tracking revenue, perhaps managing sales tax reporting, too. It's not only expenses that you need.

Someone is late filing the corporation tax return. It was due March 15. If this is not the first year of this entity, then what happened to the prior tax preparer? If this is the first year of this entity, then who told him to create an S Corp in the first place?

[Just-Lisa-Now-]

You would need to prepare the 1120-S S-Corp tax return in order to produce a K-1.  

If youre not experienced in SCorps, I would strongly suggest he find someone that is, they are a whole different ballgame from preparing a 1040.

S-Corp returns were due back on March 15th so unless someone filed an extension for it, hes already over a month late.

Personally, Id tell this joker to go kick rocks, waiting till this late of a date and then shoving the Corp filing off on you, sounds like hes going to be more headaches than hes worth.

[abctax55]

I do have to ask.... is there a W-2 from that S-Corp ??????????????

[rbynaker]

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@abctax55 wrote:

I do have to ask.... is there a W-2 from that S-Corp ??????????????

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Of course you have to ask, where's the fun in not asking!?!  In these fly-by-night cases you also have to ask probing questions like who (if anyone) actually made an S-election?  And where did the money go?  In my experience there's a pretty good chance the S Corp was set up (well, some sort of entity anyway) and then the taxpayer continued receiving and depositing income into their own personal bank account.

But back to the OP, tell the client this is beyond your capabilities and they need to go somewhere else.  I don't take on new S Corps (I have two legacy ones) because more often than not the rules are not followed and "all of that stuff is too much trouble, I just want to keep doing it the way I've been doing it."  If you like doing what I call "janitorial services" then get a nice big retainer up front and bill for the time it takes to clean up this mess.

[jeffmcpa2010]

A minor edit to dkh's comment

File an extension until and give it to your {EX}client {so he can provide it to his new tax preparer}.

[hcliston]

DKH: Thanks very much for that clarification.

I very much appreciate all of you who are taking time to help people, today of all days!

[dkh]

You're welcome @hcliston