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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > S-Corp Final K-1
Expert: John Kirk, CPA
Date: 9/4/2008
Subject: S-Corp Final K-1
Question
I received a final K-1 from an S-Corp I as a 15% shareholder in. I exited the company through a stock sale at a loss in Jan of 2007. The company went out of business in March 2007. My Final K-1 shows financial information for the Jan - Mar period of 2007, which is a net loss.
What am I entitled to report on my 1040 - the full amount of the loss, or prorated to my involvement in the company during that time period?
Also, when computing the cost basis of the shares, do I incorporate the loss from 2007 as represented on the K-1, or the basis as of the date of sale?
Answer
The loss for 2007 has already been reflected on a day-to-day basis, so all the loss reported on the K-1 is deducted on schedule E. The basis of your stock should reflect the actual cost of the stock, adjusted by the pro-rata profit or losses reported to you on the K-1's received from inception.
John Kirk, CPA
www.johnkirkcpa.com
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