Question

Shareholder Ownership Change

Forum|Forum|2 years ago
March 14, 2024
1 reply
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Using Turbotax for Business, I have a S-corp ownership percentage change effective for January 1, 2023. The software interprets this as effective 11:59pm on the change date, so it calculates the percentages for 1/1/23 through 1/1/23, and then 1/2/23 through 12/31/23 (which does have a very small percentage variance). Changing the effective date to 12/31/22 causes an error in the audit check because the effective date is for a prior tax period.

Thoughts on how to override this nuance?

TurboTax Business Windows

T

ThomasM125

You can delete the shareholder, you will see an option for that on the Shareholder Information Summary:

You would then have to edit the other shareholder percentages.

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C

ctmorgan78Author

Thanks Thomas. However this is not the issue; and this is a shareholder add, not a delete. The issue is the effective date of shareholder ownership change, which should be for the FULL calendar year of 2023 (i.e., all 365 days). Unfortunately with an effective date of 1/1/23, the software keeps the original ownership percentages for 1/1/23, and then applies the new ownership percentages for 1/2/23 through 12/31/23. (And if as a work-around you enter 12/31/22 as the effective date, this then shows as an audit flag.)

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ThomasM125

If the new ownership percentage is effective for the whole year, then you need to enter it in the first column, From 1/01/2023 to 1/01/2023 in this instance:

I did this and when I entered $10,000 of business income, the K-1 schedule listed $5,000 as the income for the shareholders who split profits 50/50 in my example: