Discussion:K-1 1120S -- ownership % first year less than actual ownership

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Discussion Forum Index --> Basic Tax Questions --> K-1 1120S -- ownership % first year less than actual ownership


Discussion Forum Index --> Tax Questions --> K-1 1120S -- ownership % first year less than actual ownership

Illini (talk|edits) said:

9 May 2013
Client asked her nephew that she invested in shares of his S-Corp about why her % ownership was so low -- his reply:  % of profit/loss based on a per share/ per day allocation, and not the ownership %

Is this an allowable allocation method by IRS for an S-Corp shareholder?

Terry Oraha (talk|edits) said:

9 May 2013
Yes but the allocation method would explain why an income allocation is too high or low but it would not explain why ownership is high or low.

Illini (talk|edits) said:

9 May 2013
So you are saying they were incorrect to state the % ownership as a pro-rata calculation of the shareholder's actual % of ownership Part I, Block F of the K-1?

Terry Oraha (talk|edits) said:

9 May 2013
I was suggesting that, but after checking, I found the k-1 ownership should be weighted on Part I, Block F. So the return is accurate, and I would expect the ownership % to be reflected properly next year.

Illini (talk|edits) said:

9 May 2013
That's the way I understand it too -- thanks!

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