Follow-up comments:
- Please reread my initial reply bullet number 4. This addresses the important question regarding the short period(s) for how the income is to be allocated based on a change in shareholder(s) due to a stock acquisition.
- Since the new owners will now have control of the corporation post closing, they will be responsible for preparing the future tax returns; including the return for the year of sale.
- Based on bullet two above, this is why my initial reply indicated that the purchase price agreement should provide how the short period, pre and post purchase, income is to be determined. This is a key factor in the purchase process of the S corporation stock.
- You will receive a final K-1 after the year end and once the tax return has been prepared by the new owners.
*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.
