A few comments:
- As a shareholder in an S corporation, you should be tracking your stock basis.
- You are correct in that you should not enter anything directly on Schedule D.
- You will update your stock basis for the applicable lines on your final K-1.
- When updating your stock basis for the final K-1, do not adjust the basis for any liquidating distribution. See next bullet.
- Hopefully the liquidating distribution was reported to you on form 1099-DIV; which is the proper method to report this. It should not technically be on the K-1 as a distribution.
- When you indicate that this is a final K-1 in TT, there will be some additional questions.
- One of the questions will be how you disposed of the S corporation stock. Don't get hung up on semantics with the options as long as the end result is correct.
- At some point TT will ask for the selling price (even though this was a liquidation). This amount is your liquidating distribution.
- Then TT will ask for your cost basis. This is you stock basis.
- You will enter the final K-1 amounts just as you have in past years.
- TT will handle the rest
- If you truly have a negative amount as you indicate, this means that you have a capital gain. So check for this on Schedule D.
*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.
