if it was a stock purchase they paid for directly then the old corporation continues (the same as what happens when publicly traded stock is bought and sold) and the S-Corp election continues unless they file to terminate it. if it is not terminated there are two ways to allocate income
1) the per share, per day basis., a shareholder selling their stock would be allocated a share of the corporation's annual income based on the percentage of the outstanding stock of the corporation he/she held, and the percentage of the year they held it. The transferor (you) , not the transferee, is considered to hold the shares on the day of the sale or disposition.
2) with the consent of all the shareholders (including the old and the new shareholders), elects to do so, it can close its books on the end of the day of the sale, meaning the S corporation will in effect have two short tax years in one year. you get allocated the profit or loss the S-Corp made including the date of sale. the others get allocated the profit or loss after the date of sale based on their respective ownership of the shares
still one return.
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someone else would have to inform you if Turbotax can do this as well as anything else that needs to be done to use this method
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they will need to keep track of their tax basis. that's because it starts off with what they paid you not your basis.
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if they paid a premium over the book value of the corporation, they get no tax benefit until they dispose of the stock. probably tax efficient for you - capital gain/loss (if a loss it could be limited due to the sale to a related party). it was not tax efficient for them.
