The S-Corp is a stand-alone entity; the death of a shareholder does not affect the S-Corp's filing requirements so you would still only file one 2017 Form 1120-S.
You will, however, have to allocate the Schedule K-1 items (Income, Deductions, Credits, etc.) according to the deceased shareholder's date of death.
If the S-Corp's income and expenses were incurred evenly, throughout the year, then you can do a simple proration of K-1 items. Example: If the deceased 50% shareholder passed on 6/30/2017, then their K-1 would reflect 1/4 of the year's activity - 50% ownership of 1/2 of the years income, etc..
If the S-Corp's income and expenses were not incurred evenly, throughout the year, then you would have to do an item by item allocation.
Can surviving spouse sign tax returns of her deceased spouse’s S Corporation taxes, if the deceased was 100% shareholder and he had no employees, and there is no administrator or personal representative? Thank you.
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