Owner buyout reporting on 1120S

[tierrawatermgmt]

I have an LLC treated like an S Corp.  My company bought out my partner.  Where is that amount deducted on 1120S?

[Mike9241]

you have an S-corp for tax purposes. therefore, the buyout is not deductible. the entry would be a credit to cash and a debit to treasury stock or some other equity account. but perhaps you should confer with a lawyer in your state. 

[Rick19744]

A few additional comments:

• This transaction is called a redemption.
• The facts are limited, so we don't know if this is a complete redemption or a partial.
• This makes a difference, as if it is a partial redemption, the issue becomes more complicated and beyond the scope of a forum such as this.
• Is the full amount of the redemption being paid out in the year of the redemption?  This will impact the reporting of the redemption.
• If a full redemption, the S corporation will also need to reduce the AAA balance by the shareholder's ownership percentage.
• You should seek some professional input into this matter to make sure the transaction gets reported correctly