pm365
Returning Member

We do not want to be double taxed -

 

 

New Member
 

 

We do not want to be double taxed -

We have received both a 1099B and a Final K-1 from a privately owned S-Corp.

We have owned shared in this S-Corp from 1990 though 2020,  they were purchased by another company and we were forced to sell our shares.  We received a 1099B from the paying entity with 1a no. shares, 1c date sold, 1d proceeds, 5 non covered securities, 6 gross proceeded reported to IRS, but no cost basis in 1e.

 

1099B

From a previous post in Intuit – We put the cost basis to be equal to the proceeds so that the 1099B would show zero gain.

 

Final K-1

In the walk through in TurboTax we checked the radio button “I sold outright (complete disposition)” so that the Final K-1 box would be checked on Schedule k-1 form 1120S.  then we selected “purchased”, filled in boxes – Acquisition Date, Sale Date, Sale Price, S Corporation Basis (that we calculate from K-1s from 1990 to 2020), then enter the K-1 as we received it.

Our concern was to make sure that the IRS received both 1099B and Final K1 from us as they did  from other sources.

 

Is this a correct method? 

 

We have seen other post to not enter the 1099B, but we thought this might flag an audit.

Thank you for your support -

Investors & landlords

The K-1 interview can be used for the disposition  OR   the 1099-B  but just  don't do both. 

pm365
Returning Member

Investors & landlords

The issue is Final k-1 to be checked you have to enter the Proceeds, date of purchase, date of sale , cost of sale, Cost basis in K-1.  you should not enter it in 1099b or you will be double taxed and will not take advantage of other offsetting benefits in K-1.

Investors & landlords

we can't see the K-1 or 1099-B.  normally the K-1 would only report your share of the S-Corp income/loss for the current period and not your sale of the S-Corp stock (especially so since it was not the S-Corp that bought it).  the 1099-B needs to be entered in the 1040 because the IRS gets a copy (it also gets a copy of the k-1). your tax basis might or might not be the same as the proceeds.  the 1040 form 8949 is supposed to reflect your tax basis. since it wasn't supplied you are going to need to determine it. it is highly unlikely that you have no gain or loss from the sale of the stock. 

 

1099B

From a previous post in Intuit – We put the cost basis to be equal to the proceeds so that the 1099B would show zero gain. don't where you saw this but in your situation, it is highly unlikely this is correct.  since you got a 1099-B that's where the sale price and cost are supposed to be reported not through the k-1 disposition worksheet. 

Investors & landlords

As noted by @Mike9241 we can't see any details, however, my thoughts are as follows:

  • As noted in another post, you do not want to duplicate the information in two places which could result in double the gain.
  • In my mind, entering the 1099-B info to arrive at a zero gain or loss makes sense if you are entering all the sales information in the K-1 interview process.  Doing this will arrive at the correct answer and be reported in the correct area of the tax return.
  • In cases such as this, handling the final K-1 current year details and sale matters in the K-1 section is a cleaner process.
  • The above assumes you know what your tax basis is in your S corp stock.  This is needed regardless of how you enter the information into TT.
  • As you noted, the IRS is only receiving the proceeds figure on form 1099-B and that is all they are looking to match in their system.  As a result, you do need to reflect this figure on form 8949 which will carry to Schedule D, but will result in a zero gain / loss as noted above.  This avoids any matching notice.
*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.