How to transfer shares to new shareholders

Steps to do this when? 

I'll page @Rick19744 (knowledgeable Champ in this area), but it appears as if you were the sole shareholder throughout the 2023 tax year.

Thanks for the reply. I was the 100% SH until Dec 31, 2022. The contract stated Jan 1, 2023 as the date the 2 new shareholders acquired the stock. Does the year really matter?

No, sorry, I assumed it was 12/31/23 for the last year you were sole shareholder.

You need to add the other party as a shareholder as of 1/1/2023. Go through the Business Info section and make the adjustments on the 2023 return under Shareholder Information. You will need to indicate that there was a change in ownership.

Based on the limited facts, a few comments:

Yes..... the tax year really does matter.

• A shareholder who disposes of stock in an S corporation is treated as the shareholder for the day of the disposition.  Regulation Section 1.1377-1(a)(2)(ii).
• Not sure what your purchase document says, so hopefully the date of sale was December 31, 2022.  This means that you would not have any ownership in 2023; no one day K-1 if this is the wording in the contract.
• Your facts lead me to believe you technically owned stock for one day in 2023; meaning the sale was technically 2023.
• Hopefully you have maintained your basis in the S corp stock as this is the only way to determine your gain or loss on the sale.
• Additionally, your K-1 should have been marked final.
• You should have completed a form 7203
• Your gain or loss would be reported on your 2022 tax return; unless you are being paid over time, or the sale technically occurred in 2023 as noted above.
• If the contract states that the purchase was on Jan 1, 2023, then technically you should still receive a one day K-1 in 2023 and the new shareholder's took possession on Jan 2, 2023.