There are a couple of items to keep in mind:
- You will need to make sure that the one shareholder's K-1 is marked final
- Only current year distributions are reflected on the K-1
- If the former shareholder received any liquidating distributions, those must be reported on a form 1099-DIV in box 9 or 10 as applicable.
- If the S corporation "redeemed" the one shareholder, then you will need to reduce the AAA by the applicable ownership percentage of the former shareholder if the redemption qualified as a sale or exchange. Based on the limited facts, it appears that it does qualify since the former shareholder completely terminated their ownership.
*A reminder that posts in a forum such as this do not constitute tax advice.
Also keep in mind the date of replies, as tax law changes.
