Stock sales_Schedule K-1 (1120S)

[SKCPALLC]

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!

[sjrcpa]

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

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

[SKCPALLC]

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?

[dkh · Accepted solution]

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

1. on each shareholders K1:  beginning and ending date
2. on each shareholders K1:  all amounts in Part III
3. on K1 worksheet:  ownership percentage for period of ownership  (was only way to get it to flow to the K1 )
4. Schedule K reconciliation columns for 12a, 13g, 15a, 16c, 16d  (may be different on 2022)
5. 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]

Yes you have to override every K-1 Line item when you cut off the books.