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Enter a change in ownership for Form 1120S in ProConnect Tax

by Intuit Updated 8 months ago

On a Schedule K-1 tax form, S corporations generally allocate items to the shareholder on a pro-rata-share basis.

How ProConnect Tax calculates pro rata shares:

  • The program divides each item on a Schedule K by the number of days in the tax year and the total number of active shares for the tax year.
  • The program only computes a weighted average if you make entries on the Change in Stock Ownership screen.  
  • Otherwise, the program will assume that the percentage entered in the Stock Ownership screen is the same throughout the year.

Note: You don't need to make entries in the Change in Stock Ownership screen for any shareholder whose ownership didn't change during the tax year.

How to enter information for a change in stock ownership:

  1. Select Shareholder Information.
  2. Select Change in Stock Ownership.
  3. Under General Information, enter a Beginning date and Ending date for each period of the year (you can enter up to 12 periods if there are multiple changes in ownership).
  4. Enter as many periods as needed to account for the entire tax year and avoid overlapping dates.  
  5. In Period 1, enter the Total number of shares outstanding, if any. If the number doesn't change throughout the year, leave the field blank on the remaining periods.
  6. Select Shareholder in the General Information window.
  7. Leave the Beginning date and Ending date inputs of each period blank if you entered dates for those periods in the General Information window.
  8. For each period, enter the Number of shares owned or Percentage.
    • Note: If a shareholder didn't have a change in ownership, don't make an entry.
  9. Repeat steps 7 and 8 for each shareholder who had a change in ownership.

Using the K-1 allocation override

If you already calculated the pro-rata share percentage outside ProConnect Tax, you can enter each shareholder’s percentage in K-1 Allocation Percentage [Override] on the Stock Ownership screen. This percentage will be applied to each item on the Schedule K-1.

Using Schedule K-1 amount overrides

Use the Schedule K-1 Overrides screen if you wish to allocate items to shareholders by dollar amount, instead of percentage.

  1. Under Input Return, select Schedule K-1.
  2. Select Schedule K-1 Overrides.

If you choose this method, you must override the amount on the applicable box for each shareholder to balance with Schedule K.

ProConnect Tax

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