Is it correct that a long term capital loss from an S-Corp is entered twice on Schedule D, on Part 2 line 10 (form 8949) and line 12 (my K-1)?

[George4]

I have a long-term capital loss from the sale of Capital Stock from my S-Corp. I'm the 100% owner of the S-Corp so the entire loss appears on my 2016 K-1.

When completing my personal taxes, Schedule D, Part 2, Line 10 shows the amount of the loss as entered on Form 8949 (with Box F checked / no 1099-B).  Line 12 shows the same loss amount as reported on my K-1.

This appears to have me reporting the same loss twice since the two entries are combined on Line 15.  Is that correct?

If not, how should it be entered?

Thanks!

[George4]

(**This update is also in a comment below the initial response)

To clarify, I dissolved the S-Corp at the end of 2016, which had 1000 shares of Capital Stock on the books from when I opened the company in 2008 with a $1000 check.  I'm the sole owner and was told to close out the Stock in the following way:

On S-Corp tax return, enter the current basis for the stock on Form 8949, Part 2, with box F checked (no Form 1099-B).  Enter a sales price of $0.  This results in the capital loss, which is then entered on Form 1120S, Schedule D, Part 2, Line 10...and totaled on Line 15 (with instructions to include on K-1, Line 8a).

Working now on my personal tax return, TurboTax walked me through entering the capital loss from the S-Corp stock sale with the same basis/sale on a Form 8949 (with box F checked / no 1099-B), which was then entered on Schedule D, Part 2, Line 10.  The same loss is entered on Schedule D, Part 2, Line 12 from my K-1, Part 3, Line 8a.

So, I'm not sure if the stock is considered the company's, or mine.  I'm the 100% owner of the company, and the sale at dissolution was to clear it off the books.

Should I not be taking it as a capital loss on my personal taxes (Form 8949 & Schedule D, Part 2, Line 10) because I'm getting credit for the loss through the K-1?

Does that help?

Thanks!

[Rick19744 · Accepted solution]

Based on your facts, it appears that you have entered this twice somehow.  Capital gain and/or losses from a K-1 should only be reflected on Sch D line 5 or 12 as applicable.

In addition, your facts are not real clear.  Is the loss from the sale of stock that the S corp held or are you saying that this is a loss on you selling your S corp stock.  If the former, then this makes sense.  If the later, the K-1 is not correct.

[George4]

To clarify, I dissolved the S-Corp at the end of 2016, which had 1000 shares of Capital Stock on the books from when I opened the company in 2008 with a $1000 check.  I'm the sole owner and was told to close out the Stock in the following way:

On S-Corp tax return, enter the current basis for the stock on Form 8949, Part 2, with box F checked (no Form 1099-B).  Enter a sales price of $0.  This results in the capital loss, which is then entered on Form 1120S, Schedule D, Part 2, Line 10...and totaled on Line 15 (with instructions to include on K-1, Line 8a).

Working now on my personal tax return, TurboTax walked me through entering the capital loss from the S-Corp stock sale with the same basis/sale on a Form 8949 (with box F checked / no 1099-B), which was then entered on Schedule D, Part 2, Line 10.  The same loss is entered on Schedule D, Part 2, Line 12 from my K-1, Part 3, Line 8a.

So, I'm not sure if the stock is considered the company's, or mine.  I'm the 100% owner of the company, and the sale at dissolution was to clear it off the books.

Should I not be taking it as a capital loss on my personal taxes (Form 8949 & Schedule D, Part 2, Line 10) because I'm getting credit for the loss through the K-1?

Does that help?

Thanks!

[Rick19744]

You were told incorrectly.

1) The disposition of your S corp stock is only handled at the personal level and should not be reflected on your S corp K-1.  The stock is yours, not the company's.
2) Your S corp stock began with your $1,000 initial capital contribution, but should have been adjusted each year by the applicable lines on your K-1.  Extremely doubtful that this is now $1,000.  
3) The disposition of your S corporation stock, based on your facts, should not be on your K-1, should not be reflected on Schedule D line 5 or 12.  
4) While your sales proceeds may be zero, assuming you received no liquidating distributions, but your basis needs to be determined as noted in item 2 above.
5) Since you have held your stock for a period greater than 12 months, this gain or loss will be reflected on Sch D and the applicable form 8949 code F.

[George4]

Got it...thanks!  I'll update the appropriate forms in the S-Corp return and generate a correct K-1 without the sale.  I'll then have only one entry in my personal taxes for the sale.

I really appreciate the quick help!!